In the 1920s’, the United States experienced many historical and cultural triumphs, as well as many downfalls. Some of its triumphs around this time included the victory in World War I (WWI), the rise in American consumerism, the advancement of technology, and the increase in the average person’s disposable income. However, on the other hand, it can be said that the most glaring downfall of the U.S. in this time period was the Stock Market crash, also known as “The Great Crash of 1929.” In just a few short days, the crash changed the lives of countless individuals. This quickly became one of the most traumatic moments in American history, bringing a poverty, unmatched to date, to nearly every corner of the nation which would soon be known as The Great Depression. But to understand why the stock market crash was able to occur and why it had such far-reaching and, we must first understand the way of life Americans had adopted leading up to the crash.
During WWI, Americans had been asked to by liberty bonds – essentially an I.O.U. note from the government which helped to fund the war and would be paid back to the buyer over time. This process of buying bonds in order to gain capitol for the government made it easy for Americans to accept the idea of buying stocks in big-name companies – such as General Motors Corporations (GM) – in order to gain capitol for themselves when it was suggested by Charles Mitchell, President at the time of the National Citi Bank. With a newfound disposable income at the end of each month, investors were able to pour more and more money into buying and trading stocks; an experience which had once seemed taboo for the average working man. Stories of average men making a fortune in just a short period of time drew many new buyers and sellers. Another aspect of this amazing new trend was anyone could follow the stock speculations of another person, for example, any barber or shoe shine boy could follow the stocks famous men like Charlie Chaplin and Groucho Marx were investing, making investing all the more attractive. For years stocks climbed steadily in value and showed no signs of stopping.
A few days later, on Thursday, October 24rd, 1929 – what would later be known as Black Thursday – the stock market crashed. No one knows for sure what caused this vast decrease in buyer confidence, resulting in a steep decrease in stock values. As a whole, millions of dollars simply disappeared, banks and large companies had to shut down, and people lost their jobs and would soon not be able to afford the bare necessities, all as a result of the rise and the fall of the Stock Market.
Bibliography
BBC. 2014. BBC Documentary 1929 the Great Crash 1929. June 27. Accessed July 6, 2015. https://www.youtube.com/watch?v=FXNziew6C9A&feature=youtu.be.
