When people came to the banks to take out their money the banks had no money to give them. Once people lost their jobs and money the had less to spend. Businesses could no longer sell their goods creating an even bigger problem. In 1929 higher amount of goods from other countries were passed in congress. Companies could not sell their products. Many people lost money they had invested in those companies.
Throughout the 1920s a long boom took stock prices to peaks never before seen, from 1920 through 1929 the stock more than quadrupled in value. Many investors became convinced that the stock was a sure thing and borrowed heavy amounts of money to invest in the market. But in 1929 the bubble burst and stocks started down. In 1932 and 1933, they hit bottom, down about 80% from their highs in the late 20's. This had harsh effects on the economy. Demand for goods declined because people felt poor because of their losses in the stock market. But perhaps the most important effect was the chaos in the banking system, as banks tried to collect on loans made to stock market investors whose holding were now worth little or noting at all.
The day's sales were 12,895,000 shares against the previous highest of 8,240,000 on March 26. The tape machine records of prices finished nearly three hours behind the market. The fall at the opening of the market was so rapid that a conference of leading bankers was immediately called and a reassuring statement was issued. This had a temporary rallying effect in certain sections, but the liquidation was continued elsewhere. This was the most famous crash in U.S. history. The Dow Industries hit a high of 386 in September, 1929. After the crash in did no get back to that level until November 1954. At its worst level the Dow dropped to 40.56 in July 1932 with was a drop off of 89%. It is estimated that $5,000,000,000 in market value were swept away in the worst crash in the history of the stock exchange to day.