Stock+Market+Crash+1929

Brittany May 8, 2008

__The Day the market crashed 1929__

October 29th 1929 [|The Stock Market] Crashed, it was a very unlucky day for people throughout the United States. Not unlucky as in losing a bet, or losing a few dollars, unlucky as in a high [|suicide] rate and large sums of money being lost because of the crash. [|Speculators] were so discouraged that many were jumping out of buildings to end their lives. Imagine walking down the street and witnessing a person literally throwing their whole life and soul out of a window and splattering on the ground, "Pedestrians picked their way delicately between the bodies of fallen financiers"(p.128). The suicide myth was in play and people could not believe their eyes, this self-destruction over the economic downfall was actually happening. The American economy was all downhill after the crash of 1929. [|Winston Churchill]commented "Under my very window a gentleman cast himself down fifteen storeys and was dashed to a number of pieces, causing a wile commotion." (P.289) With the [|Great Depression] in progress many Americans felt no need to live and a big suicide wave followed the crash in years to come. The Stock Market began in 1792 when twenty-four men signed a document in agreement to start this new business, located at 40 Wall Street in [|New York City], which is currently known today as the New York Stock Exchange Building. Throughout [|World War One] the United States was very suspicious of Wall Street, people kept a close watch on their money and very few people were involved in the Stock Market. In the year 1918, the conclusion of World War One, Americans became more willing about investing their money into stocks. In the [|1920's] The Stock Market was on fire, many corporations offered stocks for people to buy. In October of 1929 the Stock Market crashed, there were not enough observation over the Market, which led to the crash. The government should have been more involved in the running of the market. The crash could have been avoided with more attention paid to the market as well as the [|economy] by the government. If they had better organized methods such as oversight of the market, a better leadership system, oversight of the economy and with some rules set up for the market, there is a high chance that the crash could have been avoided. The Stock Market Crash could have been prevented with better organization by the government and much more oversight.

The people in charge of overseeing and the running of the market did not make the proper decisions, which was a factor that led to the crash. Since there was a lack of organization from the people in charge of running the market, the economy that used to be strong, was sent into a state of severe depression. In 1929 the New York Stock Exchange described the stock market as "an organized market, completely and readily open to the entire public. Its transactions are dictated by orders representing the public opinion. All the efforts of the exchange must be exerted at the sufferance of supply and demand, as these are generated by public opinions" (P.85) When you read this quote you get a sense of certainty that the stock market is organized and very safe; the truth is, the stock market is not actually how the New York Stock Exchange describes it, its not that black and white. Many of the problems that the stock market faced was being organized. If the market had the organization it needed such as having people in charge of the market at all times, and making sure that everyone who was involved in the market was doing their job correctly the stock market could have been well organized and avoided many problems; but it wasn't, and what the New York Stock Exchange said about themselves is untrue. There were many professional speculators did not do their job correctly, instead of keeping a close eye on their clients money and what was going on, they manipulated their clients to invest in shares that were beneficial to themselves. The government failed to set up preventive measures against this problem. According to the [|Wall Street Journal] there was "Frightened selling right before and throughout the crash". The sudden decline in stock prices triggered panic. People weren't thinking about what they were doing, everyone was panicking like crazy and selling their stocks like wildfire to get them out of the market, because there was unusual activity throughout the market, going high then low. Many people were getting uneasy and just wanted their money out of the Market just to be safe. For some, they learned the hard way and lost most of their money in the crash, this was unfortunate but with the huge lack of organization, something was bound to happen. The leaders of the economy did not have the basic skills to run a strong economy. The leaders needed to have the fundamentals down to be able to run a strong, organized economy. If there had been more skilled people were in charge, the Market could have functioned correctly and problems could have been avoided. So much money was lost in this disastrous crash "$140 billions of depositor money disappeared and 10,000 banks failed" There was not enough distribution of [|wealth] in the economy. This lead to an unequal amount of power for the upper class where they had the most money and power, and the middle and lower class were so bad that they were almost at poverty level. Spending power, which is the money you have left over after your necessities, relied too much on a small percentage of the population. In a big organization such as the stock market, where large sums of money are at risk leadership is something that is needed no matter what. With a better leadership system the stock market could have been prevented.

The market was not run properly; there was no oversight of the market and what was going on within it. After the crash, [|Herbert Hoover] who was the president of the [|United States] at the time believed that the stock market would weigh itself out and it was unnecessary to fix the problems, which was a big mistake on his part because nothing got better after the crash and he did nothing to end poverty. Herbert Hoover talked about the crash and explained that the crash was "A necessary and healthy adjustment provoked by inflated stock and undisciplined speculation". Hoover admits that there were flaws in the leadership of the market but yet did nothing to stop it. There were very few rules set out for investors to follow. When more guidelines and regulations should have been set out. [|Speculators] who were supposedly the people who were in charge of overseeing the market had no responsibility for anyone but them self, therefore they manipulated their customers whenever they wanted without any ramifications. The government should have been keeping an eye on what the speculators were doing, instead of helping people who invested their money into stocks the speculators were hurting them more, better leaders should have been put in charge. After the crash the disposable income of many of the people was very low. Only the extremely rich were able to afford to but anything any more. Since the market was organized badly with no leadership, the economy failed because only a small percentage of people were able to keep the economy running. A better leadership system was needed more than anything, few people were in charge, and the ones that were did not do their job correctly. [|Poverty] affected most of the classes after the crash; many people were thrown into poverty. There was no support of the market, so when the market crashed many people lost their money. If they had set up preventative measures to pay back the losses of the peoples money such as insurance for peoples bank accounts the economy would not have been affected so badly by the crash. Today there is [|Welfare], which helps people in poverty and gives them the money they need to survive, in the situation of the stock market crash, organizations such as insurance and welfare should have been thought up during the 1920's, this could have been a major factor in ending the crash. There was an unbelievable rate of 60% of the people placed under poverty in America. It was extremely hard for people to hold a decent job for a long time. People weren't offered the long jobs that they desired because companies took advantage and it would cost them less to hire people daily as opposed to hiring them for a yearly salary. After the crash Herbert Hoover did not set up enough systems that would help the poor get back up on their feet.

Poverty was a major problem and many things needed to be done after the crash to help people who were stuck in poverty, nothing was done to help them, organizations should have been set up previous to the crash to help the people in poverty to get back out. Since there were no rules or regulations set up against violators, they were able to take advantage of this. If they had set up these precautions the Stock Market Crash may have been prevented. If there had been a better structure that the market followed the crash would not have happened. Some people who invested their money into stocks did not know everything about the company they were investing in, therefore there would be speculators who would tell you what the best company was at the time. There were no rules that said you could give false information to your client, and these speculators would say a lot of things to their customers that are in fact false. Rules and regulations are a huge necessity for something big like the stock market, without them it would be an unorganized madhouse with no rules, which was exactly what the stock market became. Poverty is an excellent example of something that was never acted upon, and with some rules set in, the high percentage of people under poverty could have lessened. If the [|government] had been more attentive and acted to keep the market running and stop ignoring it thinking that the general well being would continue then the Stock Market Crash would have never of happened. Investors profiting from stocks when they were declining was a major problem called short selling.

One of the main reasons this crash came about was [|short selling], many people panicked because they could feel something bad was about to happen, so many people tried selling everything they could as quickly as possible. There were no laws against short selling. The problem with short selling was that there were too many transactions occurring, practically everyone who held a share sold and bought new ones that day, the market could not handle this much [|liquidation]. Many people felt that since there were no laws against short selling and no proper monitoring of the market, it was a huge reason that the market crashed.

The Stock Market Crash could have been prevented with better organization from the government and the people who oversaw the market. The United States has gone through many rough times such as recession, depressions and major downfall in the economy. The majority of the time America goes through these rough times the Stock Market gets highly affected by it, and most of the time ends with a crash. May 8, 2008, [|CNBC] published an article, which describes how "America is going through a recession; however the Stock Market is looking past the recession. The stock market isn't acting like there's a recession" Says Robert Brusca (chief economist). The market is always reaching a high point then a low point, today in 2008 the stock market is at a constant rate. It is not doing horribly, as well as it is not at the highest point. Despite these uncertainties, it appears that consumers still find the U.S. stock market attractive and see the potential for growth among many of its businesses. The stock market crash of 1929 was foreseen; neither the government nor the stockbrokers did anything to stop it. A better leadership system would have kept the stock market together. After the crash many people were placed under poverty, the government should have done a better job with getting Americans out of poverty, or even come up with an organization to help them such as Welfare. With a set of regulations and rules the market could have had the organization it needed to flourish. The thing that America needed the most to avoid this crash is simply a well thought out plan, which could have helped the economy and the market. There are many things the government could have done to prevent this crash, with better organization this mess could have been left behind. You learn from your mistakes, American's definitely learned from their mistake, and now know that everything needs oversight, without it things can go dramatically wrong.