Causes of the Stock Market CrashThe stock market crash of 1929 was a chain reaction that helped lead up to the Great Depression.In the 20th century, most of the United States' capital was represented by stocks. In the 1920's, many investors had been convinced that stocks were a sure thing because in that time the price of stocks had more than quadrupled. Investors then invested more money in the stock market, convince it couldn't fail. In my opinion, this was really quite stupid of them. Nothing is certain in life and think that stocks were just because they were doing well at the time is just plain idiocy.When stock prices began to fall, however, people started to panic. They started to sell like crazy and, since no one wanted to buy them, the prices fell even further. Now by selling, people were only losing money.
Causes of the Great DepressionObviously the greatest thought contribution to the Great Depression was the stock market crash. Over $40 million dollars were lost two months after the original crash, Black Tuesday.Banks that had used depositor's money to invest in stocks were now trying to collect on their loans. Yeah that's real intelligent. Use other people's money for your own benefit. When word got out, people rushed to withdraw their money. The problem with that was that banks no longer had the money and had to close down.With the stock market crash, every one cut spending. With less spending, that meant that less had to be produced. This lead to people losing jobs and that lead to people not being able to make payments on items that had been bought through installment plans. Those items were then repossessed and inventory continued to increase. That meant that even less need to be reproduced so more people were laid off. The unemployment rate soared to 25% due to this game of dominoes. Don't you just love the domino effect? Things just keep getting better and better in this case.
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