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The Stock Market Crash Of 1929

1548 words - 7 pages

All nations in the world face tragedies. When a tragedy occurs in a nation it affects all the citizens of the country. People may get affected mentally, socially or even physically. But in some cases tragedies may lead to the gates of better living. One of those tragedies which help the nation reform as a whole was the Stock Market crash of 1929. The stock market crash of 1929 strengthened the nation as a whole as it lead to the creation of policies such as the Glass Steagall Act, Security Exchange Act and the Social Security Act.
The Stock Market crashed due to a plethora of reasons. After the World War I in America, the stock market had increased drastically. Many people believed that ...view middle of the document...

So to protect the american citizen’s money, the Glass Steagall Act came into effect to promote banks to succeed. It created restrictions within the Federal Reserve System which helped to enhance people to put their money within banks. Within the Federal Reserve System, the Act separated the Commercial banks from the Investment banks and thus not allowing Commercial banks from undermining securities. Laws and securities were put within banks so that the banks do not carry out any malpractices with the peoples money. During the Great Depression, people were not sure whether they should put their money within banks as they did not trust the banks due to its insecurities. In order to convince the people that the banks would not cause any harm to their money and to them in the future, the Glass Steagall Act created the FDIC which is the Federal Deposit Insurance Corporation. This corporation allowed people to deposit upto a given amount of money and that amount of money would be insured. This meant that if a bank was not able to give back a person’s money then the FDIC would give back that amount of money which was put on the deposit. Through this act people were able to feel safe and not allow the banks to ever misuse the money by investing them into stocks. People would not have to worry about the money they have lost. This furthermore helped to secure citizen’s money and people would never end up in a crisis where they would lose all their money due to the banks. The people could always reassure themselves that they would be given back the deposited money within the FDC. The people in the country were now able to store money in banks and also enriched the people’s trust in the banks and government. It also boosted people’s confidence in investing stocks boldly because they would always have money in his/her bank even when stocks go down suddenly.(Kennedy)
During the time of the increase in stock markets, big businesses tried to overtake the stock market onto their hands. By using the governments support big businesses were able to persuade their ways to increase their business and help the economy increase drastically. People also started to buy heavily and were in debt for not having enough money to pay them back. Since the government was not able to control and regulate this people were facing dearly as for the fact of not knowing what would all of this buying and spending lead to. For the government to regulate these corruptions on the market the Securities Exchange act came into existence. It is considered as a part of Roosevelt’s New Deal. The main goal of the act was to regulate and secure stock exchanges. Due to the creation of SEC the federal government was able to increase its powers on regulating the stock markets to the benefits of the people. If brockers wanted to do any type of trading either on the markets, stocks or bonds they would have to submit to the SEC commision a report on trade that they would be going to conduct. This...

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