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Stock Market Crash of 1929

 

            
             The decade known as the Roaring Twenties was drawing to a close. The American economy was booming, and living was easy. The 1920s had been good for many Americans and prosperity abounded. Most Americans shared a sense of invincibility and reveled in the United States" economic good fortune. Ironically, as people prepared to say goodbye to the 1920s, soon, they would have to bid farewell to the way of life that earned the decade the designation of the "Roaring Twenties". .
             The stock market, in the 1920s, had been on a steady climb. Stocks were profitable for people of all walks of life, from the bankers to the common citizen. The banks were making money from people who borrowed funds to buy stocks, and the people who borrowed funds from the banks for stock purchase were then selling said stocks to other individuals at a higher price. Everyone was happy and all were making money. Blinded by the hope of great fortune, investors failed to realize that what goes up, must come down. Early in 1929, forecasters were calling for the stock market to enter a recession by the end of the year, but most did not heed the admonishments. However, in late October 1929, the forecasts proved true. No single incident is directly responsible for the three-day event that would come to be known as The Great Crash of 1929. Instead, a series of occurrences combined at precisely the right time to form a black cloud over the United States economy.
             The leading factor of the crash of 1929 can be attributed to the wild speculation that was going on in the latter years of the decade. As noted above, everyone was making money off the market. Margin trading was the norm. Stock prices continued to rise as long as there were buyers. The problem, though, was that eventually, the supply of buyers would level off, and so, too, would the prices. John Kenneth Galbraith, author of The Great Crash 1929, states, "When prices stopped rising - when the supply of people who were buying for an increase was exhausted - then ownership on margin would become meaningless and everyone would want to sell.


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