On the night of Monday, October 21st, 1929, margin calls were heavy and Dutch and German calls came in from overseas to sell overnight for the Tuesday morning opening. On Tuesday morning, out-of-town banks and corporations sent in $150 million of call loans, and Wall Street was in a panic before the New York Stock Exchange opened.

On Thursday, October 24th, 1929, people began to sell their stocks as fast as they could. Sell orders flooded the market exchanges. This day became known as Black Thursday. (Black Thursday…) On a normal day, only 750-800 members of the New York Stock Exchange started the exchange. There were 1100 members on the floor for the morni

There are five proposed reasons as to why the stock market crashed. One of the reasons was that stocks were overpriced and the crash brought the share prices back to a normal level. However, some studies using standard measures of stock value, such as Price to Earning ratios and Price to Dividend ratios, argue that the share prices were not too high. Another reason is that there were massive frauds and illegal activity in the 1920’s stock market. However, evidence revealed that there was probably very little actual insider trading or illegal manipulation.

Also during the crash 4,000 banks failed, for the simple reason that the banks ran out of money. Four years later, Congress passed the Glass-Steagall Act, which essentially banned any connection between commercial banks and investment banking, to ensure that this would never happen again. The Federal Reserve and other banking regulators have softened some of the Act’s separation of securities and banking functions by letting banks sell certain securities through affiliated companies.

After the crash there was criticism of the Federal Reserve policy. Between October 1929 and February 1930 the interest rate was lowered from 6% to 4%, and the money supply increased immediately after the crash. Commercial banks in New York made loans to security brokers and dealers, which in turn provided liquidity to the non-financial and other corporations that financed brokers and dealers prior to the crash.

Another reason was the higher wages of the ordinary workers. This meant that everyone in America had extra money to put into savings or invest in the market. The third reason was that at this time, money was made more readily available from banks, at a lower interest rate, to more people. Some economist debated that this influenced the stock market, and it is conceivable that people took loans

Some topics in this essay:
President Hoover, Federal Reserve, Jones Average, Herbert Hoover, Stock Exchange, Adolph Miller, Price Dividend, Black Thursday…, Commission SEC, Dutch German, stock market, jones average, stock exchange, dow jones average, dow jones, brokers dealers, york stock exchange, federal reserve, york stock, corporations financed brokers, february 1930, corporations financed, non-financial corporations, invested stock market, non-financial corporations financed,