How the Stock Market Crash of 1929 Affected the United States

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How the Stock Market Crash of 1929 Affected the United States

Kyle Tenisci

Dr. Greason

HS 310-52

13 May 2013

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The year of 1929 is marked by the Stock Market Crash in which most consider to be the beginning of the Great Depression. This was not the sole cause of the Great Depression, though. The Stock Market Crash was caused by an economy that was not stable enough to handle the high stock prices. The Stock Market Crash helped bring on the Great Depression which forced the United States government to make changes in the regulation of stock exchanges, providing much greater protection for investors. The United States was a young nation and was not always as powerful as it is now or was in 1929. The United States was formed from European citizens who wanted to start their lives over. So the United States had relatively little money compared to the financial status of the rest of the world. London at the time was considered the center of finance. The United States borrowed money from England and other countries to spur its industry. By 1960 it seemed that the United States would inevitably be the world's most important business and financial power. The Civil War provided a boost for industry, which jump-started the gradual shift of financial power from London to New York. The United States had a valuable asset in the form of land. “The United States was forced to develop itself before it could worry about competing with the world. Hence, the amount of capital was far greater once available to be spent outside the United States. The year of 1914 can be considered the point at which the United States would never be second in the world again.” (Axon, 32) Europe was stricken with war and the United States was turned to for supplies. The “wealthy European countries were ravaged by war because of casualties, economic losses, and expensed of war over four years.” (Axon, 33) The United States only was in the war for a year and did not have its country damaged by the war. The United

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States emerged from World War I being owed billions of dollars for having financed most of the war and was acknowledged to be the leader of the Western world. The early 1920s were a time of booming industry, of soaring hope and confidence. The ups and downs of the stock market were hardly noticed by the average American. The average American was more concerned with their daily life than the state of the stock market. The economy was such that many new products and services were available to almost everyone, including the automobile, radios, and other products for the home. The stock market was controlled by professionals that worked for large firms who had good financial backing which made it easier to use the market advantageously. Small investors were never shut out of Wall Street but the professionals paid for stock tips and also rigged the market so that certain stocks would rise and fall. This gave small investors a much harder time in making money through the stock market. As the market began to grow more small investors entered the game and were really just gambling their money. Most were not successful but some got lucky or got a good stock tip and rode the rising market until they lost their money too with the Stock Market Crash. At this time nobody had any reason to believe that the stock market would not keep rising. “Throughout the 1920s a long boom took stock prices to peaks never before seen. From 1920 to 1929 stocks more than quadrupled in value. Many investors became convinced that stocks were a sure thing and borrowed heavily to invest more money in the market.” (PBS) As the market grew, the stock market became a way of life and was a highly discussed topic among common Americans who were eager to get a piece of the pie. Americans no longer were connected by the common bond of making a life for themselves like at the birth of the nation. The 1920s were an era of revolution in ideas, beliefs, inventions, and ways of...
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