Okay so the economy was booming in 1929 stocks were really high but then the stock market suddenly crashed why did that happen? How did the stock market suddenly just crash?(1929 Great Depression)
Too much borrowed money.
http://www.angelfire.com/co/pscst/stock.html
The stock market crash that occurred in 1929, also known as the Great Crash or the Wall Street Crash, was a major event that marked the onset of the Great Depression. The reasons behind the crash were complex and involved a combination of economic, financial, and psychological factors.
One important factor leading to the crash was the rampant speculation and overvaluation of stocks during the 1920s. During this time, investors were heavily buying shares with borrowed money, making massive profits in a short period. This led to a speculative bubble, causing stock prices to soar to unsustainable levels.
However, cracks started to appear in the economy. Some signs of economic distress, such as a decline in agricultural prices and production, began to worry investors. Additionally, there were warning signs regarding the soundness of the banking system and the overall stability of the economy.
On October 24, 1929, also known as Black Thursday, stock prices began to plummet. This ignited panic among investors, leading to a massive sell-off. This continued in the subsequent days, and on October 29, 1929, or Black Tuesday, the stock market experienced its most severe collapse.
The crash was exacerbated by several factors. Firstly, margin trading, which involved using borrowed funds to purchase stocks, intensified the problem. As stock prices fell, investors faced margin calls and had to sell their shares, thereby amplifying the downward spiral. Secondly, commercial banks and investment trusts, which had heavily invested depositors' funds in the stock market, faced severe losses. This resulted in a loss of confidence in the banking system, leading to a wave of bank failures.
The stock market crash had significant impacts on the economy. It wiped out billions of dollars in wealth and triggered a chain of events that plunged the world into the Great Depression, which lasted for about a decade.
To get a more detailed understanding of the stock market crash in 1929, one can study historical accounts, books, and documentaries on the subject. Additionally, analyzing economic data, studying the policies of the time, and examining the actions of key players in the financial system can provide further insights into the causes and consequences of the crash.