The Stock Market: The Causes And Impacts Of The Great Depression

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The Great Depression started with the stock market crash of 1929. “In 1925, the total value of the NEW YORK STOCK EXCHANGE was $27 billion. By September 1929, that figure skyrocketed to $87 billion” (The Market Crashes 1). Stocks were being sold for way more than their reasonable value and that couldn’t go on indefinitely. Although more people in the U.S.owned stock than ever before, “90% of American households owned precisely zero shares of stock” (Sinking Deeper and Deeper 1). This stock frenzy was fueled by the practice of buying stocks on margin (The Market Crashes 1). This meant that the person was borrowing the majority of the money, up to 75%, used to purchase the stock. Lenders were happy to make these loans because the stock market was considered a sure bet. With more and more people investing the price of stocks continued to rise. It got to the point where people couldn’t sell their stock for what they paid for it, some couldn’t be sold for any price. When too many people are trying to sell stock at once it brings the price down, sometimes to zero. On Oct. 24, 1929 that’s exactly what happened. Within 10 weeks the value of the stock market had been cut in half (The Market Crashes 1). Many of the loans taken out to buy stock were never going to be repaid so the financial institutions that made the loans often went out of business. With no federal insurance on deposits by individuals, many families lost all their savings. With less money for people to spend,
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