The Great Depression 1930" Documentary: The Untold Story
The stock market crash of 1929 is commonly thought to have triggered the Great Depression. But it was one factor among many, and not even the most important. What transformed a normal recession into a decade-long catastrophe was a brilliant but brief period of misguided policymaking that left the country saturated with fear and mistrust. Stock markets crashed because investors believed they had no other options but to sell stocks at any price and cash out completely. Nevertheless, there is something special about the stock market crash of 1929 and its implications for investors today. The crash was so swift and severe that it reversed what had been an almost uninterrupted bull market in stocks since 1919. At its peak in September of that year, share prices were up over 200% from their previous trough two years earlier. So when the stock market began its precipitous decline, it covered ground with astonishing speed and intensity. Read more
The Great Depression: A Brief History
The Great Depression is known as a time in history when people suffered economically and socially. For many countries, this was a long-term condition that began in about 1929 and lasted until about 1939, although for some areas it ended sooner. There is disagreement about how to define the Great Depression, which is generally agreed to have been worldwide. The Great Depression originated in the United States, but its effects were felt across the world. In fact, the economy of every industrialized country was negatively affected. The Great Depression began in the United States, but quickly spread to other countries. The United States was the first to experience significant effects, but countries in every corner of the globe were soon affected. The most destructive years of the Depression were between 1933 and 1939.
Bank Runs and Stagflation
A key factor, to understand the onset of the Great Depression and how it played out over the next few years, was a series of bank runs and the failure of 9,000 banks. Banks were the mainstay of the nation's financial system, and one of the main ways that people and businesses borrowed money and stored savings. In the late 1920s, there were about 24,000 commercial banks in the United States, with about $120 billion in deposits. Only about half of that money was kept in a savings account, where it earned interest. The rest was deposited in a checking account, where the money was available to the account holder whenever he or she needed it.
Instilling Confidence
The stock market crash itself was not enough to cause the Great Depression. After all, the Dow had fallen by 40% before and it had not led to a massive economic downturn. The difference this time was the lack of confidence that was felt by investors and consumers alike. Uncertainty and doubt replaced the confidence and optimism that had prevailed leading up to the crash.
Hoover and the Smoot-Hawley Tariff Act
The second president during the Depression was Herbert Hoover, who was blamed for exacerbating the crisis by adopting the wrong policies at the wrong time. Hoover saw the crash coming, but he was unable to provide a quick solution for the problems it created. He was a staunch proponent of the Smoot-Hawley Tariff Act, which raised taxes on imported goods in an attempt to shield American workers and businesses from foreign competition. The bill aggravated trade issues, which were already strained due to the worldwide economic slowdown.
Conclusion
The Great Depression was a defining moment in American history, and the effects of the stock market crash are still felt today. By most economic measures, the country was doing well in 1928, just before the Depression began. But the market crash changed the way many people thought about investing, savings, and other financial issues. While the Great Depression technically ended when the economy began to recover in 1939, the effects of the crash and the policies that followed are still felt throughout the country.
The stock market crash of 1929 and its implications for investors today
The stock market crash of 1929 and its implications for investors today are that it is important to understand that one market crash does not necessarily lead to depression. The issues that caused the market to crash in 1929 are different from those of today, although investors should still exercise caution and avoid investing in volatile assets.
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