Causes of the Stock Market Crash of 1929:
In the 1920’s, America was experiencing a rise in economic growth and many citizens were enjoying a higher standard of living. The stock market kept going up and up and it seemed like the United States had unlimited prosperity. Known as the “Roaring Twenties”, this decade gave birth to numerous new inventions such as the radio and household appliances. While these new things brought a rise in profits for companies, they were also one of the contributing factors that would eventually lead to the decline in the economy that was up ahead. The purchase of expensive items such as radios, refrigerators, and automobiles declined as people began to become satisfied with the things they already had. Because businesses could no longer sell these products, they had to lay off many of their workers.
During this time, stock prices began to rise, leading to many investors spending their entire fortunes on them, believing that stocks would make them rich. Businesses soon realized, however, that the prices were too good to be true so they began trading, which in turn lowered the prices of stock. President Herbert Hoover himself said that the stocks were overvalued. This speculation among others also contributed.
October 24, 1929 or “Black Thursday” was the first sign that the economy was about to take a turn for the worst. People began selling their stocks as fast as possible. The market exchanges were flooded with sell orders. 13 million stocks were traded, a record high for that time. The prices of these stocks went down so fast that the stock ticker could no longer keep up. At the end of the day, the ticker had lagged behind 90 minutes and failed to show the most current stock prices. As a result, the Dow Jones dropped 21% causing a panic to sweep the nation.
On the next day, many of America’s largest banks including Morgan, Chase, and National City banks came together to decide what they were going to do. They eventually came up with the decision to purchase U.S. Steel shares above their market price. Using their own money, a few bankers including J.P. Morgan, bought out the banking system. Although their intentions were good, the bankers were unsuccessful.
Over the course of the next few days, investors gave up and sold their shares. On Monday, October 28th, a new record of stocks was traded and the market declined 22%. On October 29th, or “Black Tuesday, the decline worsened even more with 16 million stocks traded. In the end, the stock market lost a total of $14 billion, throwing the United States into the Great Depression. After this, the stock market kept on declining until it reached its all-time low on July 8 of 1932.
I think that the stock market crash was a very unfortunate thing considering all the trouble it caused people with the Great Depression and whatnot. But, as they say, all good things must come to an end. Although the causes were kind of confusing to read about at times, it was still interesting to blog about and helped to give me an understanding of the stock market.
Sources: http://www.themoneyalert.com/stockmarketcrashof1929.html
http://www.echeat.com/essay.php?t=27546
http://www.angelfire.com/co/pscst/stock.html
The Boulder Dam:
When President Herbert Hoover served as a secretary of commerce, he proposed the construction of a new dam to be built on the Colorado River. Along with this, Hoover wanted to pay for the dam’s construction by using the money that would be made from the electric power that the dam would produce. This, he hoped, would minimize federal intervention. In 1928, this enormous project won the approval of Congress and Six Companies, Inc. began construction on the dam in 1931, which lasted until 1936. Located in the Black Canyon of the Colorado River, Boulder Dam, also known as Hoover Dam, was constructed by thousands of workers and cost hundreds of lives as such a large concrete structure had not been built before. The concrete dam stands 726 ft high and 1,244 ft long, making it the world’s tallest and second largest. Today it provides hydroelectric power, controls floods, and also supplies water to many cities such as Las Vegas and Los Angeles. The Hoover Dam is also a major tourist attraction, with almost 1 million visitors each year.
The Boulder Dam/Hoover Dam was also interesting to blog about and I liked learning how it came about. Hopefully I will be able to visit it some day as it seems like a cool thing to see.
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