The United States stock market crash of 1929 triggered a worldwide recession and a depression throughout America.
The 1920’s in America was time a time when the economy flourished, however it was only a few years before things started to go downhill. By 1927 the country was seriously overproducing goods for which there was no place on the market.
Before the Crash
The overproduction of goods soon led to a slowdown in agriculture and factories, which in turn led to a loss of millions of jobs. However bankers and financers refused to heed the signs. Instead they continued buying and selling stock on Wall Street, borrowing the money and buying on margin.
The Stock Market Crash
In late October of 1929 the price of stocks began to fall, causing investors to lose their confidence and sell their stocks. Most investors opted to sell all of the stocks they held. This selling quickly turned to panic beginning on October 24, which became known as “Black Thursday”. This continued on through the week and into the next. On October 29, 1929 Wall Street officially collapsed when 16 million shares were sold and prices collapsed completely.
Immediate Results of the Crash
This crash led to an overnight catastrophe. People lost their fortunes and companies collapsed, wages fell and many people became unemployed. Banks also lost money as people began to withdraw their savings. Many banks simply did not have the money to give, having risked it in the stock market. The result was the ruin of many of America’s banks. As this continued people began to lose their homes and farms because they couldn’t pay their mortgages. These people who had lost their homes often took up residence in shantytowns.
President Hoover was heavily criticized for his handling, or lack of handling, of the immediate resulted of the stock market crash. Hoover believed strongly in limited government and so the idea of federal assistance was abhorrent. Instead he tried to get people back to work by establishing the President’s Organization for Unemployment Relief, which failed. The result was that Hoover was voted out of office and the Republicans lost control of both Congress and the White House. Roosevelt won the 1932 election by a landslide with his promise of a “New Deal”. The “New Deal” was a series of programs designed to tackle the depression. Huge public works projects were begun, which created millions of new jobs. Roosevelt extended the governments responsibilities significantly, creating new social welfare assistance programs. Roosevelt’s plan ultimately worked and was adopted by other democracies around the world.