The 1929 stock market crash, which ushered in the Great Depression, is frequently regarded as one of the most important moments in American history. The crash was caused by a number of things, including:
Stock Market Crash in 1929
Speculation: A lot of people invested in the stock market during the 1920s in an effort to earn a rapid profit. However, rather than being based on the stock’s actual value, a large portion of this investment was made on speculation. As a result, the stock market experienced a bubble that finally deflated.
Overproduction: In the 1920s, as the economy grew, many businesses started creating more things than consumers could afford. This resulted in an oversupply of goods and a drop in pricing, both of which impacted several enterprises.
Uneven fortune Distribution: While the rest of the country struggled during the 1920s, the richest Americans saw their income and fortune soar. As a result, many individuals found themselves in a situation where they were unable to purchase the goods and services that businesses were creating.
Easy Credit: In the 1920s, it was simple for people to get credit, and many financed their stock market investments by taking out loans. The overproduction issue was exacerbated by people using this easy access to credit to purchase things and services they couldn’t afford.
Government Policies: In 1928 and 1929, the Federal Reserve, which is in charge of controlling the money supply and interest rates in the US, increased interest rates, making it harder for firms to borrow money. This aided in the price drop and subsequent crash.
A number of causes, including speculation, overproduction, unequal distribution of wealth, cheap lending, and government regulations, contributed to the stock market crash of 1929. These elements worked together to produce a stock market bubble that finally burst, causing prices to fall and the economy to collapse. Even now, economic policies and investment plans are still influenced by the lessons acquired from this incident.