The Reasons Behind The Stock Market Crash of 1929

Essay by smil3yyHigh School, 12th gradeA+, March 2006

download word file, 6 pages 3.0

In October 1929, the world watched in horror, investors panicked, and brokers were bewildered as stock prices plummeted lower than ever before. Fright and confusion were visible in the eyes of traders, and Wall Street was a scene of complete and utter chaos. This disastrous market crash quickly put an end to a decade of prosperity, and became the beginning to a dark and regrettable era in Canadian history (Bierman). Black Tuesday is remembered by all of us as the start of the Great Depression (Tiscali Reference). On October 29 1929 alone, thousands of investors traded 16 million shares of stock away, and the Dow Jones Industrial Average dropped a whopping 12% (Tiscali Reference). Previously during the year, stock prices had been the highest they had ever been, and in the course of only 4 months, Canadian stocks lost over $5 billion (Government of Canada). With a surplus of sellers and only a handful of buyers, stock prices fell far below the prices paid for them, and shareholders lost billions within hours (Aaseng 69).

The crash was undoubtedly one of the worst economic events in history, but what exactly was its cause? Investors, the government, and economic events are all to blame. The stock market crash of 1929 was unavoidable and occurred as a direct result of market speculation, lack of government intervention, and economic slippage.

Black Tuesday and the devastating events leading up to it was largely the fault of everyday investors. The market is greatly influenced by our view of it, and the confidence we have in the stocks that are available (Sparknotes). The most important and most evident reason for the great stock market crash was the excessive amount of market speculation during the prosperity of the roaring twenties (Aaseng, 26). As companies were booming with inflated...