The Stock Market Crash
The depression was caused by a number of economic events during the 1930s. Although the 1920s appeared on the surface to be a time of great riches, income was unevenly dispersed. The wealthy made large profits, but Americans spent more than they earned, and farmers faced low prices and heavy debt. The remaining effects of World War I caused economic problems in many countries, as Europe struggled to pay war debts and reparations. These problems contributed to the crisis that began the Great Depression.
America's "Great Depression" began with the dramatic stock market crash on "Black Thursday", October 24, 1929 when 16 million shares of stock were swiftly sold by terrified investors who had lost faith in the American economy. At the height of the Depression in 1933, nearly 25% of the Nation's total work forces were unemployed.
Wage income for workers who were lucky to have kept their jobs decreased almost 43% between 1929 and 1933. It was the worst economic disaster in American history. Farm prices fell so drastically that many farmers lost their homes and land a lot were even suffering from hunger.
Although the stock market has the reputation of being a very risky investment, it did not appear to be that way in the 1920s. With the mood of the country exuberant, the stock market seemed an infallible investment towards the future.
As more people invested in the stock market, stock prices began to increase. This became first noticeable in 1925. Stock prices changed up and down throughout 1925 and 1926, followed by a strong upward trend in 1927. The strong bull market (when prices are rising in the stock market) enticed even more people to invest. And by 1928, a stock market boom had begun.
The stock market boom changed the way investors viewed the stock market. No longer was the stock market for long-term investment. Rather, in 1928, the stock market had become a place where everyday people truly believed that they could become rich. Interest in the stock market reached a fevered pitch. Stocks had become the talk of every town. Discussions about stocks could be heard everywhere, from parties to barber shops. But as this great thing did end began something far more worse then anticipated, The Great Depression.
The depression was caused by a number of economic events during the 1930s. Although the 1920s appeared on the surface to be a time of great riches, income was unevenly dispersed. The wealthy made large profits, but Americans spent more than they earned, and farmers faced low prices and heavy debt. The remaining effects of World War I caused economic problems in many countries, as Europe struggled to pay war debts and reparations. These problems contributed to the crisis that began the Great Depression.
America's "Great Depression" began with the dramatic stock market crash on "Black Thursday", October 24, 1929 when 16 million shares of stock were swiftly sold by terrified investors who had lost faith in the American economy. At the height of the Depression in 1933, nearly 25% of the Nation's total work forces were unemployed.
Wage income for workers who were lucky to have kept their jobs decreased almost 43% between 1929 and 1933. It was the worst economic disaster in American history. Farm prices fell so drastically that many farmers lost their homes and land a lot were even suffering from hunger.
Although the stock market has the reputation of being a very risky investment, it did not appear to be that way in the 1920s. With the mood of the country exuberant, the stock market seemed an infallible investment towards the future.
As more people invested in the stock market, stock prices began to increase. This became first noticeable in 1925. Stock prices changed up and down throughout 1925 and 1926, followed by a strong upward trend in 1927. The strong bull market (when prices are rising in the stock market) enticed even more people to invest. And by 1928, a stock market boom had begun.
The stock market boom changed the way investors viewed the stock market. No longer was the stock market for long-term investment. Rather, in 1928, the stock market had become a place where everyday people truly believed that they could become rich. Interest in the stock market reached a fevered pitch. Stocks had become the talk of every town. Discussions about stocks could be heard everywhere, from parties to barber shops. But as this great thing did end began something far more worse then anticipated, The Great Depression.
We can afford all that we need; but we cannot afford all that we want.
-- by Franklin D. Roosevelt