Stock Market Crash
United States 1929
Synopsis
The 1920s are often generalized as a decade of post-war affluence and good times. In reality, however, there was great economic disparity worldwide, which was one of many economic and political factors that precipitated the Great Depression of the 1930s. Nevertheless, the stock market crash of 1929 is the hallmark event frequently said to have brought about these economic hard times.
Various United States economic policies in the 1920s, including tariffs and reparations, decreased the international market for American goods, contributing to economic woes in the U.S. In addition, the nation's productive capacity was greater than its capacity to consume. This prompted credit expansion, which increased public debt. Other credit mechanisms existed that also allowed increased stock market speculation and buying on margin. Those who bought stocks on margin ultimately had to make good on their loan by paying cash or selling the stock, and many opted to sell because of inadequate funds. The federal government had attempted to stem speculative buying, but with little effect.
The stock market crash began Tuesday, 29 October, and continued to fluctuate for the next two weeks. Politicians and financiers expected the economy to self-correct as it had during previous cycles, but it did not, and the effects lasted for years.
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