The 1920 s were a clip of great prosperity and growing for Americans. This clip period even got the moniker The Roaring Twenties. Americans were high in liquors, and times were altering. During this clip, Americans were acquiring wealthy and holding merriment making so. They started to put their money in the stock market. Then on one twenty-four hours in 1929, the market crashed and set many people to the hapless house. This twenty-four hours would go to be known as Black Tuesday, October 29,1929.
In the early months of 1929, the market was making record highs. The economic system was flourishing, and at that place seemed to be no concerns for the state. In September of 1929, the Dow Jones Industrial Average reached its all clip high. It rose to 381.17 points, the pre-depression high ( U.S. News & A; World Report 32 ) . Everything seemed to be traveling so good for our state.
On Thursday, October 24, New York s Stock Market crashed sharply. On that twenty-four hours, 12,894,650 portions of stock changed custodies, harmonizing to the official figures ( Faber 150 ) . Although this is non known in history as the twenty-four hours the market crashed, it starts to state the narrative of how the economic system was traveling to hit a really low point. People knew what was traveling on. They knew they were losing a batch of money on this one twenty-four hours. Rumors of self-destructions kept brushing the trading floor ( Faber 151 ) .
On Monday, October 28, the market was once more acquiring into problem. The big stocks of the clip were dropping in record Numberss. Steel dropped 18 points, General Electric went down 48 points, and the whole list of stocks traded on the New York Stock Exchange lost an norm of approximately 50 points ( 153 ) . As word got out about the record falling of points in the market, people began to inquire if their money was safe in the stocks. Then, as if it were planned, people decided that their money wasn T safe and they wanted it out of the Stock Market before it hit stone underside. So on Tuesday, October 29, 1929, the Stock Market crashed and many people lost everything.
On this Tuesday of 1929, more than 16 million portions of stock were traded in the largest volume of Stock Exchange activity of all time recorded ( 153 ) . Most of the major stocks suffered awfully on this twenty-four hours. American Telephone & A; Telegraph went down 28 points; Delaware & A; Hudson Railroad closed with a loss of 25 and a one-fourth. General Electric plummeted 28 points, U.S. Steel dropped 12 points and General Motors went down 7 and a half points ( U.S. News & A; World Report 36 ) . This is what one intelligence article read the twenty-four hours of the clang:
When the market opened this forenoon, traffic came to a standstill as 1000s of investors blocked the route. They were seeking to force their manner into the Stock Exchange to sell portions that had become about worthless. After 16 million portions had been sold, monetary values dropped to sway underside. There is an air of incredulity in America tonight. Many investors face ruin ( Sharman 39 ) .
There were several factors that caused this desolation. Most of the grounds were by the American people themselves. Peoples were get downing to see great wealth. They thought that if they invested in the Stock Market they would acquire more money. This was the first job, people who didn Ts know about the stock market were puting their money into it. Now that so many people were puting, stock monetary values rose to monetary values that were higher than what the company was truly deserving.
Americans began to recognize that they were paying excessively much money for their stocks, and they tried to sell their stock to take a net income. The people who didn t recognize this waited excessively long to sell their stocks, and when they did, they sold for less than what they originally paid for the stock. At this point they started losing money. Not merely were people purchasing stocks, but they were besides utilizing their stocks as collateral. When the market crashed people lost their collateral and their money.
The rich people were looking for ways to acquire even richer. Affluent people frequently got together and made pools. Pools are defined as combinations of individuals who attempt to act upon or pull strings the monetary value of a stock for their ain benefit ( Tindall 1092 ) . Basically, a pool is when rich people buy and sell a stock back and Forth to each other driving the monetary value of that stock up. When the mean investor sees the manner the stock is increasing, they invest their money into it. Then when the rich get the money they want, they sell the stock and the monetary value goes back down, doing the mean investor to take a loss. This pattern is now illegal.
The authorities besides had its manus in the clang of 29. The Federal Reserve ( FED ) raised involvement rates. This caused the merchandising of stocks because it was feared that companies would lose money. In bend, people quit taking out loans to purchase merchandises, due to the higher involvement rates.
When the market crashed, people weren t the lone 1s hurt. Banks had to shut down every bit good. Peoples didn t trust the Bankss any longer, so they started to withdrawal their money. The Bankss couldn Ts give all the money back to the people, because they didn Ts have adequate currency. Americans began to stash their money in mattresses, the walls of their houses, Sn tins buried in their paces, anyplace but in the Bankss ( Farrell 21 ) . Since people hoarded their money, there was no more money in circulation.
Depression – a clip of great agony for our state. Americans would endure throughout the mid-thirtiess, as unemployment hit an all-time high. Our market today has made a twosome of alterations to see that this doesn T go on once more. The market will no longer be able to plump like it did. Circuit surfs automatically halt merchandising on the NYSE for a 30 minutes when the DOW beads by 350 points and for an hr when the blue-chip index falls by 550 points. They have revised the system several times in recent old ages. Peoples today are besides acquiring smarter about their money and how they invest it.
Even though there are a batch of people in the market today, there is besides more instruction about it so that a calamity like this doesn T go on once more. Our authorities has become smarter and has people looking out for marks that wouldn t indicate us to a clang in the market. These people s occupations are to supervise the market and how it s traveling. If it appears to be heading in the incorrect way, the authorities has ways to seek and turn it about.
As the American people have gotten smarter they have besides become wiser with their money. This is apparent in the manner our economic system is headed. The Dow Jones Industrial Average has surpassed 11,000 points. Our economic system is headed in the right way, and we don t have to worry about another calamity like the one in 1929.
