Weekly 1

THE STOCK MARKET

CRASH OF 1929

After the World War I, the “Roaring twenties” started it was an era were there was an economic boom and new technologies such as the vacuum cleaner, the dish washer, the radio and the automobile, America was in a place of peace and happiness for everyone. People started buying on credit without even having the money comforted by the fact that the stock market was in a good position in that moment.

The financial boom occurred when all families were optimistic. They could afford Automobiles, telephones, and other new technologies. Ordinary people afforded things they couldn’t afford,  

like houses, investments and they began borrowing loans they couldn’t pay in their whole life. Farmers also got affected because their crops decreased and they were forced to leave their lands.

In 1929, the Federal Reserve raised the interest rates in attempt to moderate the economy and the stock market. On Thursday, October 24^th, 1929 or The Black Thursday, a panic started, investors began to realize the stock market was going down, rich people went bankrupt in a second, people started to commit suicide, a record 12,894,650 shares were traded.

After the crash the economy couldn’t go anywhere but up. The stock market crash wasn´t  the only cause of the Great Depression, but it did made a worldwide economic collapse. By 1933, nearly half of the banks in America failed, the unemployment rate was nearly 15 million people.

The President Herbert Hoover tried many ways for solving this problem, like, private charities to help the victims the US government intervened to provide unemployment relief, , to encourage unions, and create a government system of old age pensions and unemployment insurance known as social security.

However, the Roosevelt didn’t had success in reviving economic growth and business confidence remained weak.

As a result, it would take World War II, a huge production of armaments and the unemployment to women and black people that went into workforce to finally bring the U.S. out of the Depression.

In conclusion, if it was not for the war maybe the U.S will not be a huge economic power in the world and there are some things I learned about this Stock Market Crash, first, is that all financial markets and banks are interlinked so if one goes wrong the other ones are affected, second, is that when there is a problem the government should act quickly because it’s essential to ease the pressure and not to act slow and give a bad response that makes the problem worse. Something good came out of all of these problems, bank deposits now are secured, people who work there cannot steal or lie from the investors and banks can’t control the money from others, but there will always be corruption on financial systems.

Many ask themselves the question “CAN IT HAPPEN AGAIN?”

For me the answer will be yes, it happened already twice, so it can happen another time, but the good thing is that now days we can now what´s going on, we are more informed than ever, and economists understand better the market and it’s for sure it would never happen as bad as it happened in the STOCK MARKET CRASH OF 1929.