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A stock market crash is when the stock prices drop dramatically . This was a cause of the Great Depression because everyone went to go get their money that they had invested and there wasn't any money.

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Table of Contents

1. What Caused the 1929 Stock Market Crash?

2. Black Tuesday

3. Effects of the 1929 Stock Market Crash: The Great Depression

The Stock Market Crash of 1929 occurred on October 29, 1929, when Wall Street investors traded some 16 million shares on the New York Stock Exchange in a single day. Billions of dollars were lost, wiping out thousands of investors. In the aftermath of that event, sometimes called "Black Tuesday," America and the rest of the industrialized world spiraled downward into the Great Depression, the deepest and longest-lasting economic downturn in the history of the Western industrialized world up to that time.

What Caused the 1929 Stock Market Crash?

Stock Market Crash of 1929

During the 1920s, the U.S. stock market underwent rapid expansion, reaching its peak in August 1929 after a period of wild speculation in the Roaring Twenties. By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value.

Among the other causes of the stock market crash of 1929 were low wages, the proliferation of debt, a struggling agricultural sector and an excess of large bank loans that could not be liquidated.

Did you know? The New York Stock Exchange was founded in 1817, although its origins date back to 1792 when a group of stockbrokers and merchants signed an agreement under a buttonwood tree on Wall Street.

Black Tuesday

Stock prices began to decline in September and early October 1929, and on October 18 a big drop in stock prices began. Panic soon set in, and on October 24, Black Thursday, a record 12,894,650 shares were traded. Investment companies and leading bankers attempted to stabilize the market by buying up great blocks of stock, producing a moderate rally on Friday.

On Monday, however, the storm broke anew, and the market went into free fall. Black Monday was followed by Black Tuesday-October 29, 1929-during which stock prices collapsed completely and 16,410,030 shares were traded on the New York Stock Exchange in a single day. Billions of dollars were lost, wiping out thousands of investors, and stock tickers ran hours behind because the machinery could not handle the tremendous volume of trading.

Effects of the 1929 Stock Market Crash: The Great Depression

After October 29, 1929, stock prices had nowhere to go but up, so there was considerable recovery during succeeding weeks. Overall, however, prices continued to drop as the United States slumped into the Great Depression, and by 1932 stocks were worth only about 20 percent of their value in the summer of 1929.

The stock market crash of 1929 was not the sole cause of the Great Depression, but it did act to accelerate the global economic collapse which it was also a symptom. Stock prices continued to drop through 1932 when the Dow Jones Industrial Average-a widely-used benchmark for blue-chip stocks in the United States-closed at 41.22, its lowest value of the 20th century, 89 percent below its peak.

By 1933, nearly half of America's banks had failed, and unemployment was approaching 15 million people or 30 percent of the U.S. workforce. The Dow Jones Industrial Average would not return to its pre-1929 heights until November of 1954, about 25 years later.

African Americans were particularly hard hit, as they were the " last hired, first fired." Women during the Great Depression fared slightly better, as traditionally female jobs of the era like teaching and nursing were more insulated than those dependent on fluctuating markets.

Life for the average family during the Great Depression was difficult. Storms and a severe drought in the Southern Plains ruined crops, causing the area to be nicknamed the Dust Bowl. "Okies," as fleeing residents were called, moved to big cities looking for work.

Did you know? The Great Depression helped bring an end to Prohibition. Politicians believed legalizing the consumption of alcohol could help create jobs and stimulate the economy.

The relief and reform measures in the New Deal programs enacted by the administration of President Franklin D. Roosevelt helped lessen the worst effects of the Great Depression; however, the U.S. economy would not fully turn around until after 1939, when World War II revitalized American industry.

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Stock Market Crash: 1929 & Black Tuesday | HISTORY

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The Stock Market Crash of 1929 ushered in the Great Depression, as some 16 million shares were traded on Black Tuesday, Oct. 29, 1929, wiping out many investors.

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Using credit is when you can't afford to pay in cash right then so you buy it then pay it back. This was a cause of the Great Depression because people just kept buying stuff on credit that they would never be able to pay back.

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Stock Speculation is making risky decisions to make a profit. This led to the Great depression because when the stocks changed a little bit everyone wanted to make sure they got their money back out.

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what are 3 causes of the great depression

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Causes Of The Great Crash Of 1929 | Great Depression Facts

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This is a website about the Great Depression.

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This raised taxes on imported goods. This contributed to the Great Depression because the economy is going to go down because it is so expensive to trade with other countries.

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Smoot-Hawley Tariff Act, U.S. legislation (June 17, 1930) that raised import duties to protect American businesses and farmers, adding considerable strain to the international economic climate of the Great Depression. The act takes its name from its chief sponsors, Senator Reed Smoot of Utah, chairman of the Senate Finance Committee, and Representative Willis Hawley of Oregon, chairman of the House Ways and Means Committee. It was the last legislation under which the U.S. Congress set actual tariff rates.

The Smoot-Hawley Tariff Act raised the United States's already high tariff rates. In 1922 Congress had enacted the Fordney-McCumber Act, which was among the most punitive protectionist tariffs passed in the country's history, raising the average import tax to some 40 percent. The Fordney-McCumber tariff prompted retaliation from European governments but did little to dampen U.S. prosperity. Throughout the 1920s, however, as European farmers recovered from World War I and their American counterparts faced intense competition and declining prices because of overproduction, U.S. agricultural interests lobbied the federal government for protection against agricultural imports. In his 1928 campaign for the presidency, Republican candidate Herbert Hoover promised to increase tariffs on agricultural goods, but after he took office lobbyists from other economic sectors encouraged him to support a broader increase. Although an increase in tariffs was supported by most Republicans, an effort to raise import duties failed in 1929, largely because of opposition from centrist Republicans in the U.S. Senate. In response to the stock market crash of 1929, however, protectionism gained strength, and, though the tariff legislation subsequently passed only by a narrow margin (44-42) in the Senate, it passed easily in the House of Representatives. Despite a petition from more than 1,000 economists urging him to veto the legislation, Hoover signed the bill into law on June 17, 1930.

Smoot-Hawley contributed to the early loss of confidence on Wall Street and signaled U.S. isolationism. By raising the average tariff by some 20 percent, it also prompted retaliation from foreign governments, and many overseas banks began to fail. (Because the legislation set both specific and ad valorem tariff rates [i.e., rates based on the value of the product], determining the precise percentage increase in tariff levels is difficult and a subject of debate among economists.) Within two years some two dozen countries adopted similar "beggar-thy-neighbour" duties, making worse an already beleaguered world economy and reducing global trade. U.S. imports from and exports to Europe fell by some two-thirds between 1929 and 1932, while overall global trade declined by similar levels in the four years that the legislation was in effect.

In 1934 President Franklin D. Roosevelt signed the Reciprocal Trade Agreements Act, reducing tariff levels and promoting trade liberalization and cooperation with foreign governments. Some observers have argued that the tariff, by deepening the Great Depression, may have contributed to the rise of political extremism, enabling leaders such as Adolf Hitler to increase their political strength and gain power.

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Smoot-Hawley Tariff Act | History, Effects, & Facts | Britannica

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Smoot-Hawley Tariff Act, U.S. legislation passed on June 17, 1930, that raised import duties to protect American businesses and farmers, adding considerable strain to the international climate of the Great Depression. Learn about the development and effects of the Smoot-Hawley Tariff Act in this article.

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This is when the US was producing way more stuff than they could sell. Overproduction led to the Great Depression because we couldn't buy all the stuff that was being made so it made the prices go way down.

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Poor banking practices were another cause of the depression.Banks loaned money to people who invested in the stock market.When the market crashed, people could not pay their loans and the banks could not give depositors their money.As a result, many banks closed down and many families lost their life savings.

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Poor banking practices were another cause of the depression.Banks loaned money to people who invested in the stock market.When the market crashed, people could not pay their loans and the banks could not give depositors their money.As a result, many banks closed down and many families lost their life savings.

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Overproduction of food made the prices go down because there was so much of it. This led to the Great Depression because when the prices went down, the farmers didn't get as much money. Therefore, they couldn't pay back loans and things to the banks.

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Farm Collector - Dedicated to the Preservation of Vintage Farm Equipment

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U.S. Farmers During the Great Depression - Farm Collector

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Let’s Talk Rusty Iron: U.S. farmers faced high farm mortgages and big debts even before the Great Depression began, and the stock market crash and dust storms only made it worse.

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When people saw that the stock market crashed they went to the banks to try to get their saving out so they didn't lose their money. This led to the Great Depression because a lot of banks ran out of money so they couldn't give the people their money back.

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Bank Run - Facts & Summary - HISTORY.com

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Find out more about the history of Bank Run, including videos, interesting articles, pictures, historical features and more. Get all the facts on HISTORY.com