The Stock Market Crash of 1929

The stock market has been around and well-known for many years and has been dated back into colonial times. However, in 1929, the stock market unfortunately took a drastic turn for the worst. In just a matter of days, the market underwent a cascading decline, and took everything down with it.

To many, the stock market may seem very complicated and esoteric. However, after some research some come to find its actually very simple, because someone else basically does the work for you. This ‘someone else’ is a stock broker. In simpler terms, a stock broker is like an auctioneer. The job of an auctioneer is to pair a buyer with a seller, much like the job of a stock broker. They also determine adequate pricing of whatever it is being sold (Gerlach). In the stock market, shares of companies are what is being sold. If you buy a share of a stock, you own a part of that company. Generally, if the company did well, you would earn a profit, and if it didn’t do so well, you could potentially lose money.

Investors soon purchased stock on margin. Margin is the borrowing of stock for the purpose of getting more leverage. For every dollar invested, a margin user would borrow 9 dollars worth of stock. Because of this leverage, if a stock went up 1%, the investor would make 10%! If a stock drops too much, a margin holder could lose all of their money AND owe their broker money as well (Stock Market Crash).

Investing money in the stock market was a very risky act. Some lucky investors end up acquiring huge profits and simultaneously become millionaires over night. However a lot of patience is necessary as not to panic and sell your share as soon as the prices drop in the slightest bit. Keeping calm through a downfall could ultimately be your saving grace in the end.

Because more and more Americans were purchasing stocks, the value of the marked drastically increased (Ohio History Center). There was a peak in prices in September 1929, and after this, the priced dropped. Some brokers were on the brink of panic and quickly called in there loans, which would have been a wise decision. On the other hand, many brokers carried on, continuing to loan money, and looked at the decline as just a bad day in the market. On Wednesday October, 23rd, the Dow Jones had descended 24 points in a mere half hour, causing a slight panic across the nation. The next day, Thursday the 24th, all brokers called in their loans causing all prices on the market to face a gargantuan downfall. Many at this point figured the stock market just need a few days to bounce back. To keep a lid on the hysteria, brokers began to merge their funds to buy enough stocks to even out the market. This briefly balanced the priced. However, by the following Monday, prices had fallen again.

Tuesday October 29th, 1929, ‘Black Tuesday,’ was the day all hell had broken loose. This was the very day of the stock market crash. Because of the rapidly declining prices, the once reliable ticker tape had trouble keeping up and ended up causing mass confusion and chaos. On account of the dwindling prices, many people vacated the market and withdrew all their funds while their debts were still meager. With everyone pulling out at once, mass mayhem had occurred and the market had crashed.

After the crash, the suicide rate skyrocketed. Many people leapt to their demise out of tall buildings because being dead was easier than facing financial debt. The most abundant time of suicides came in 1930, the year following the crash. In 1925 the number of suicides in New York was 14.4 per 100,000 of the population. In 1934, that number had escalated to 17.0 per 100,000 of the population (Galbraith). Also, the stock brokers who decided suicide was not the answer, lost their jobs. American across the nation were in debt. However, it was the Americans who has invested all they had who were hit the hardest and has lost everything as a result of the crash. Eventually the crash of the stock market has negatively effected everyone.