1920's Stock Market Crash

Causes

One of the reasons people belive the stock market crashed, was the movement by important people and the media to stop speculators. Speculators are people who create a predition of what is going to happen to stocks and businesses, based on current trends, major company changes, and events and issues around the world. For example, if there is a war going on in the middle east, (where most of the worlds oil is drilled), a speculator might say that the oil industry is going to collapse. This will make people who own oil stock sell their stalk, make companies worry, and drive down the price of oil stocks. This creates a chain effect throughout the market. If oil stocks start to crash, then car stocks or stocks based on heating companies will also take a hit. Speculators are still one of the major reasons for stock market unstability.  The second main reason for the market crash, were the public utility stocks. Public utility stocks, are stocks in public management, such as heating, air conditioning, electricity, etc. Although a lot of houses had these kinds of utilities, many homes did not. All of the utility businesses were unregulated, and as they expanded, no one could control them. People thought it would be a good idea to purchase stocks in utilies, and the prices for shares skyrocketed., and became very expensive. Finally, the government tried regulating the utility businesses, and put in new rules and laws that constricted the companies. The shares took a huge plunge, and peoples investments and bank accounts were hurt. Another reason why the stock market crash really took a toll on the econonmy, is because banks were so heavily affected. Most banks thought it was safe to invest in the stock market, and put most of their money in it. When the stock market crashed, banks lost all of their money, and people couldn’t withdraw any of their money from the bank. This lead the banks to massive debt,  and bankrupcy.

-Colby Oleksy

Citation: 3, September. "Stock Market Crash." Wikipedia, the Free Encyclopedia. Web. 30 Sept. 2011. http://en.wikipedia.org/wiki/Stock_market_crash.

Results

During the Great Depression, unemployment reached 25% by 1933. 86,000 businesses failed between 1932-33. 4,340,000 Americans were out of work. More than eight million were on the street a year later. The national income had dropped 60% between 1929-1934. 9 million people had there bank accounts whiped out. The poverty rate grew significantly. There was a decline in the worlds birth rate. Between 1930-1940, 550 million babies were born but, that was an estimated 50 million less then what was perdicted due to the depression. The richest 1% of the population had 40% of the wealth in America at the time. 10,000 banks had failed by 1932. Most industial stocks had dropped 80% from 1930-1932. International trade had fallen 2/3 since 1929.

In the United States the per capita income fell from about $700 in 1929 to $400 in 1933. Most of the European people suffered the same. Only Soviet Russia, which had almost isolated itself from the rest of the world, escaped the effects of the Depression. Although it was a hard time there was no sharp rise in deaths from starvation and disease. The world death-rate declined in the 1930's, and life expectancy continued to rise. The Fair Labor Standard Act of 1938 set a 44-hour workweek with time-and-a-half for overtime and made a minimum wage of 25 cents an hour. The act also provided that the hours would drop to 40 and the wage would rise to 40 cents over time. In addition, the bill made child labor under the age of 16 illegal.

-Joey Altschuler

Citation: 3, September. "Stock Market Crash."3.Oct.2011 http://mars.wnec.edu/~grempel/courses/world/lectures/depressionresults.html

New Laws Governing Finances 

Because of the stock market crash in the late 1920's the government had to make changes so that things like this would not happen again.  Some of thes laws are,  The Emergency Banking Relief Act this act gave the government control over banking transactions and exchange rates.  Also, the Glass-Steagall Banking Reform act 1933(which is also known as the Banking Act makes sure that no comercial banks can join the investment bussiness) created the Federal Deposit insurance Corporation (FDIC) to insure all of the individual deposits with government money. The FDIC also helped gain back people's trust in banks because many people had lost all of their savings when the banks failed in the stock market crash in 1929. The FDIC made sure that americans would not lose all their money if a bank ever collapsed again.

-Lindsey Caparoso

Citation: Glass-Steagall Act(1933)Oct. 3 http://topics.nytimes/topics/reference/timestopics/subjects/g/glass_steagall_act_1933/index.html

The Great Depression(1920-1940)October 3 http://www.sparknotes.com/history/american/depresion/summary.html