Black Tuesday Essay

1012 words - 4 pages

The stock market crash, October 29, 1929 this is also known as Black Tuesday. The Great Depression was an economic slump in North America and Europe. The industrialized Western world had experienced the most ruthless and prolonged depression. Cinderella Man is only one example of how families struggle and overcame the great depression. You will see how this effective many Americans.
Why the stock market crashed, was due to two factors, economic and financial. For example economic factors where, poor distribution of wealth, many consumers relied on credit, credit dried up, consumer spending dropped and industries struggled. Financial factors were a threat to the stock market rise in the mid-1920s. Speculation in stock increases, margin buying encouraged by Federal Reserve policies, and stock prices rise to unrealistic levels. These factors contributed to the Great Depression on how the people lost a lot of their money. However, political and business leaders rushed to calm the panic. They stated that this is only temporary, and the economy would soon recover. Many people, banks, business and even operations overseas were effective by the crash. For people, they lost not only the money they invested but also their savings, homes whatever they could sell to make up the difference they owed the brokers. The banks were also invested in the stock market. Between loans, deposits and investments made on margins some banks were pressure to close. Businesses were also forced to close, due to that the customers were not spending, and banks could not lend. These effected overseas operations, due to that we could no longer loan out money. We were trying to collect, but they could not repay. The United States and European countries started to lay off workers.

The economic conditions went from excellent to poor. More bank failures, farm failures and unemployment. With banks closing people were losing the money they had in the bank. At this time, there was no federal insurance to protect the people’s money. Today banks are to hold more assets in cash than what is to be paid out to depositors. In view of the fact that consumers are not purchasing as much food, farmers are struggling in saving their farms. Also, the drought or also known as the dust storms are contributing to this reason. Since people were not buying as much the farmers could not afford to keep the farms, and the drought was making it even more difficult to grow food. Therefore, unable to make payments they would either file for bankruptcy or may be foreclosed. With these failures came unemployment, this is cause by not having enough jobs for people. The unemployment rate rose up to 25 percent, some areas where even higher...

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