Could+it+have+been+prevented

Stock Market Crash 1929 //-Could it Have Been Prevented-//

By: David

The economy was “booming”, and economic growth was rising day by day. The early 1920’s were remarkable years for Americans. With big business becoming increasingly popular, the successful businessmen of those companies inspired people. The [|New York Stock Exchange] became a new way to quickly make money in the 1920’s as well. However, some say that the stock market became a little too popular amongst Americans. The market’s corruption rose drastically due a large amount of greedy investors wanting top dollar for the shares that they owned. Early signs of the [|Great Depression] were apparent in the late 1920’s, however people took them with a grain of salt. In 1929, the year of the Crash, everyone panicked. A slight decrease in the Market’s value meant major economic loss to many Americans. The sale of stock skyrocketed that day, and overwhelmed the market. The [|investors] themselves caused the [|Crash of 1929]. Panic and terror of losing money filled [|Wall Street]; thus, the Crash was unpreventable and essentially needed to happen.

The 1920’s were rapidly progressive years for the United States. New technology was being introduced day by day. Products such as the “[|electric refrigerator]” and the “[|washing machine]” were now publically available. However to promote these modern amenities, the corporations needed to advertise. Modern day corporations were becoming very well known in the country. As consumer goods became popular, so did the businessmen that worked for those companies. The country also evolved socially as well. Women increasingly had more [|rights]. They were no longer the “housewives” but were upstanding figures in society. All of these beneficial impacts brought negative impacts as well. Small family owned businesses were being put out by large chain grocery type stores. The typical American family could not compete with large stores that provided the same quality goods at lower prices. As time went on in the 1920’s, the country began progressing economically.

In the mid 1920’s the idea of being involved with business was very popular. Successful corporate officials from those businesses became national celebrities “overnight” since their products were so widely used domestically. More and more people realized the wealth that was available for them to acquire. The average American started to consider investing as a “fall-back” opportunity; however these investors were inexperienced and knew little about the stock market. Many people turned to the Market as the way to earn money. They sought quick wealth. They would just follow the corporate leaders. They didn’t expect the tragedies that were to come.

Investors swarm the floor of the New York Stock Exchange everyday, yelling and filled with adrenaline from the thrill of the fluctuating stocks. The [|NYSE], in the 1920’s was practically dominated by a few wealthy investors. Investors manipulated the market in ways that immensely influenced everything and everyone that was involved with the market. Those investors used insider information to become successful in the market (U.S. Stock Market Crashes). They would artificially inflate the [|stock] price by purchasing large sums of a particular stock. In turn, this would encourage potential buyers to also invest in the same stock. As more and more investors acquired shares in a particular stock, the value would rise. They would then sell their stock making a large profit (US Stock Market Crashes). For example in March of 1929, Michael Meehan was making an astonishing $100 million a week by manipulating the stock of “[|Radio Corporation of America]” (RCA). That was an incredibly large sum of money back then. It equals approximately $1,203,197,747.44 in today’s money, taking inflation into account (The Inflation). Analysts say that the market was unstable, due to strong figures in the economical world, and this made it susceptible to any sort of damage.

By early 1929, the economy started to fall. Small factors became apparent in everyday life, which people didn’t really pay that much attention to. In other words, the American economy was showing signs of a depression well before the actual Crash. Analysts predicted the Crash based on slight downfalls. Automobile sales were down, steel sales were down, among other things as well (Six Days). All these factors essentially caused decrease in stock value in the Market. This shocked many of the amateur investors, who were not used to this. Many investors had all their money tied up in stocks. They lacked a capital reserve account, which is an account dedicated to an amount of money to invest (Stock Market Crash). As prices began to drop, people began to panic. They began to sell stocks as quickly as possible. All the orders for sale of stock overwhelmed the NYSE. [|Ticker] values began to show false information, which caused even more of a stir. Human instinct is to sell when prices start to drop, in everyone followed suit. The horror of losing all your money was flashing before everyone’s eyes. Panic filled Wall Street, and the investors themselves caused it. Since they panicked so much, they practically destroyed the NYSE’s main [|informational board]. All those falsified stock values filled people with alarm. The Crash took its toll on not only investors but the United States as a whole. The Crash was caused by the people, by the panic, and by the mass amount of orders for selling stock. The NYSE was primitive at the time, and could not handle the orders. Due to the Crash, the [|Dow Jones Industrial Average] decreased by 508 points (Black Monday) and the market lost 47% of its value in a mere 26 days (Kirk Report).

The interesting question today is, could this happen to us again? Back then; the Market could be easily manipulated. There was really no regulation whatsoever. Today we have the Government to keep an eye on the Market and to make sure no acts of unfair trading take place. New technology is now used in the NYSE that can handle any amount of trades, without damaging the system (Black Monday). These new controls set by Government Agencies such as the [|Federal Trade Commission] prevent and help decrease corruption in the trading system. Our government has taken every possible problem into consideration, and works very hard to prevent a Crash like that of 1929 from happening again.

The Stock Market Crash of 1929 was an awakening call for the US Government and the general public. Since then, the Government has had a very strong impact on the market by passing various regulations that not only control but also protect corporations as well as investors. The general public has also become much more educated in the matter, learning from past mistakes. This economic crisis also helped set the groundwork for a more structured system. The Crash was caused by the corrupt trade methods of investors; thus, The Crash was inevitable and needed to happen in order to change their views and habits.

__Annotated Bibliography__


 * "Black Monday Stock Market Crash." Dictionary of American History, Supplement. Charles Scribner's Sons, 1996. Reproduced in History Resource Center. Farmington Hills, MI: Gale. http://galenet.galegroup.com/servlet/HistRC/**

-This small article provides a brief overview of the Crash and how it affected the world. It provides information about losses due to the Crash, and reminds us that the Crash made the path do the Great Depression.


 * Blumenthal, Karen. Six Days in October: the stock market crash of 1929. New York : Atheneum Books for Young Readers, 2002.**

-This book leads the reader through the crash day by day. Blumenthal tells us about how each day of the Crash took tolls on investors. This book is meant for “young readers” however it provides detailed information that is helpful for everyone.

<[|http://www.thekirkreport.com/2004/10/1929_stock_mark.html>.]**
 * Kirk. "1929 Stock Market Crash." The Kirk Report. 2008. 20 Mar. 2008

-This is another short article that mainly focuses on the losses caused by the Crash. Kirk also talks about history repeating itself, and asks if the Crash could happen again. Even though he provides statistics on the Crash, he primarily wrote this article because or his question on history repeating. He wrote it on October 25th, 2004 which essentially is 4 days before the crash in 1929.


 * "The U.S. Stock Market Crashes On Black Tuesday, October 29, 1929." DISCovering World History. Online Edition. Gale, 2003. Reproduced in History Resource Center. Farmington Hills, MI: Gale. http://galenet.galegroup.com/servlet/HistRC/**

-This source gives an in depth analysis of the crash and what it brought to America. It gives information about events prior to the crash, the crash itself, and post crash occurrences. I would highly recommend this source to anyone wanting an overview of the Crash of 1929.


 * "Stock Market Crash of 1929." Gale Encyclopedia of U.S. Economic History. Vol. 2. Detroit: Gale, 2000. 965-966. Gale Virtual Reference Library. Gale. Greenwich High School. 11 Mar. 2008 .**

-This source talks more about what the “people” though of the Crash, and how they were affected by it. It talks about investors at the time, and their methods of trading. The source has more to do with life at the time, rather than history to us.

Stock_market_crash_1929>.** Or
 * "Wall Street Crash of 1929." Wikipedia. 30 Mar. 2008 .**
 * Friedman, S. Morgan. The Inflation Calculator. 11 May 2008 <http://www.westegg.com/

-The site I used to calculate the amount of money that Michael Meehan would have made today do to inflation.