The Crash of '29
By the mid 20s, united States of America was a trend-setter, centre of the world economy, and seemed to be a Xanadu for the people who struggled across the ocean. Expensive cars, celebrities, rise of cinematography, dollars. Everything seemed perfect, and nothing fore shaded a disaster. But in one short day, a co-called Black Tuesday, on the surface of American Dream appeared a black hole which in one day absorbed all of the gold aspirations and sweet dreams leading country to a great depression. But what exactly happened, and what was a result of the 1929 Stock Market Crash?
First of all, let's define the "Stock Market" and its crashing. Stock market is a "general term for the organized trading of stocks through exchanges and over-the-counter."1 This is one of the definitions, which basically means a place where you can buy, exchange or sell stocks. Central American stock market was located on Wall Street. That was a place where the 1929 crash occurred.
It was a crazy era, the "roaring 20s". Americans had an enormous enthusiasm, desire for life and their lives were full of optimism. The new word "stock" appeared in every slang and dialect. Nation was obsessed with the concept of becoming a millionaire overnight. Stocks were selling off like hot pies, and no one really thought of a disaster. Everything went so well, that even mini-crash of March 25, 1929 spread panic, as prices dropped. Soon, that little crisis was forgotten, but as stocks were selling and considered to be extremely safe, the steel production, building and car businesses started to decline giving the first calls to a market crash disaster.
In September 3, of 1929 the stock values reached its peak, and people were flying in euphoria. But everything good comes to an end and after two days prices began to decline. Scared people started to desperately selling their stocks. But stock market was based on the idea, as while people invest, we are good. Lots of money were imaginary, or borrowed from the other people. We can compare it to a jar which people fill in, and then market gives out some money out of pot, and this was usually enough. But now, as people were all demanding for their money, the pot just wasn't big enough, and they could not fulfill the dreams of American citizens.
Then a decade of co-called Black Days occurred. The flow of people trying to save their money and get rid of their stocks was so massive, that on Friday, November 14, the Stock Market became isolated, and was closed for a couple of days. When it reopened next Monday, flow of people only increased, but prices kept dropping. The nation in panic tried to get their stocks repaid and to get their money back. This chaos became somewhat stable only by the end of November, but the American economy and attitude was never again that careless and free.
Multiple numbers of events took place in this time and composition of them led to a stock market crash. For example there is a theory that market fell because of shortages of monetary mass itself. During that time, in America dollars were connected to golden supplies of a country and this limited the amount of money. Manufacturing grew, and on the line where centuries meet new commodities appeared such as planes, cars, radio. The amount of goods, as gross, as by assortment increased in times. As a result of limited monitory mass and increase of commodity mass a strong deflation occurred - fall of prices which led to a financial instability, bankruptcy of many companies and delays in returning credits. This effect hit even growing areas of market. Also a big influence on market crash was monitory policy of Federal Reserve System which in the time of first recession decided not to support banks and let the system heal itself. Another factor was great increase of manufacture without real need for that, so many goods were just lying in storehouses.
Rapid growth of population played a huge role in crash. Multiple numbers of kids per family was really poplar in 20s, and counted up to 3 to 5 kids per family. However, because of medical progress and increased standards of living, the natural selection and regulation through disease decreased. Also one of the causes was co-called the Smoot-Hawley Tariff Act. It put a huge duty on imported goods. This way US wanted to strengthen their internal production and economy. But as a result became a response from the foreign countries which increased custom on American imported good. It brought to a sudden decrease of financial turnover between US and Europe and fatally pushed American economy off the cliff.
Loans on a stock market were really popular. This type of loan consisted of for example: the stocks from company could be bought only on 10 percent of its actual price. But there is one trick - broker in any moment can ask for full payment for loan and the holder of socks was required to return money within 24 hours. On 24 of October, 1929, brokers from New York began to collect their stocks back. This became a cause of deficit of money in banks and as a result, a bankruptcy of sixty thousand banks. That enabled foreign businessmen buy banks of opponents and huge companies for cents. When the society got financially broken, bankers of Federal Reserve of US decided to cancel a golden standard in US. That way they decided to collect all of the gold left in America. Under the excuse of fighting against the consequences of depression, a confiscation of gold of all nations of US was performed. The end of World War I became a huge cause, as many factories and people were involved in producing goods for a war. But with the end of WWI many people became unemployed. By the early 1930s, the unemployment rate was getting close to 23,6 percent. The end of World War I became a huge cause, as many factories and people were involved in producing goods for a war. But with the end of WWI many people became unemployed. By the early 1930s, the unemployment rate was getting close to 23,6 percent.
Government itself tried to help its people, so by the time Roosevelt became a president, he took a couple steps in stopping a great depression. In first 100 days of his presidency were recognized with intensive work on overcoming of financial crisis. Few organizations were formed, such as federal administration of urgent help. Its duties consisted of helping propel with no jobs. Lots of new building projects began to realize; lots of new bridges, roads, highways, public schools and other building for social use. This law of rebuilding city and giving jobs for people happened on 16 June, 1933. The second portion of the deals from that administration was saving natural resources, making them more rich and clean. They purified wearer, controlled and prevented erosion of the soil, improvements in natural energy resources occurred. People learned to extract energy from the water, rivers. Different companies and organizations were created, which prevented floods.
Unemployed were actively involved into public jobs. By 1933-1939 because of public jobs and under a supervision of PWA and Civil Works Administration number of people involved in civil service reached four million people. Through the congress couple laws which regulated financial so here were passed out. For example, the agricultural debt, which counted to be twelve milliards, was reformed. The time given to repay was increased, and the percents of debt were decreased. This way, government let farmers' ability to repay for their farms and agricultural production grew, prices started to stabilize. The frost year of Roosevelt presidency wasn't enough to recover badly broken economy of US, so the results were diverse: he increased the income, prices were somewhat stable, but the re was still a great level of unemployment.
The effects of the Stock market crash on a daily life of the people and nation of United States changed in dramatic way. Many people's income relied only on the fall and rise of stocks. All they knew is how to play on s bull market. But once prices fell, many people became really poor. These brokers became literally broke. Many families were split because of fathers' disability to feed his kids and wife.
Not only for America had the crisis become devastating. Almost every developed nation felt the shake from events happening in United States. The manufacture level dropped to the number it was thirty years ago, as it was in the beginning of XX century. In industrialized, developed countries with market economy the number of unemployed people reached 30 million. The condition of farmers, owners of little businesses and middle class workers got poor. Many reached the line of poverty. More people supporting communism and socialism appeared. As a result of great depression, in Germany the national-socialist party came to power, which later bought to Hitler and WWII.
Nowadays many economists consider that crisis in USA, 1929 Stock Market Crash, got worse from the wrong actions from the government's side. Powerful people in economy like Milton Freedman and Hannah Swartz thought that government's fault is in the created co-called "crisis of trust", because during the hard times for economy, no financial support was provided so the wave of bankruptcy flooded America. There is a theory that the help and support from the government could be provided much earlier. Instead of 1932 year the action could have been taken two years earlier. Experts even say that if central bank would have provided help earlier, the recession would have been completed five years ago, so instead of crisis lasting for decade, this could have ended in four or five years.
The effects of stock market crash were devastating, in one day people lost their money and status, but for some people crash became a trampoline to start new businesses and even increase their income. What became the end for some, turned out to be a success for the others. Market crash showed people a new way to leave. The values were changed, people started looking for happiness money can't buy, cinema appeared, music begins to progress. Many social programs began to work. Railroads, highways were rebuilt; the cities got improved and became more comfortable. Quality of agriculture increased, new methods to grow cheaper crops appeared. Market Crash showed people the best that money can't buy. It became somewhat a dust from which phoenix would appear.