Did the stock market crash in 1929 because too many people were having fun in the early 1900s?

Dan Kappes

Dan Kappes

Since the economy, prosperity, and technology of the world took a boom from the late 19th century until the 1930s, despite World War I, it seems to be that a lot of rich people were having fun a lot, from trips on ocean liners to grand ballroom parties like in The Great Gatsby.

Did the stock market crash in 1929 because too many people were spending money and partying like crazy?


I believe the stock market crash was the result of various issues clashing together e.g. Bankers and wealthy business men were manipulating the market for quite some time to keep it soaring upwards. Living standards among ordinary citizens were also going up and the public were encouraged to invest in the market as many could now afford it. They were also given credit so that a $50 investment in cash would be credited to something like $90 and this would encourage them to invest more money in the market. They would even take out huge loans from the banks just to pay for more credit and business men would invest their own company shares in the market. The general public were all swept by it. Industry and new household appliances were in high demand, and now the public could afford everything they dreamed of by investing their hard earned money in the stock market. A popular slogan was 'Buy now - pay later'. More people took out loans to invest in the market with the promise of receiving a big profit when they eventually sold their shares. But nobody wanted to sell. The economy was booming and everything was going up.

Just like the Titanic it seemed impossible that it would go down. Then suddenly in late 1929 there was a serious problem. Farmers were producing too much food. The factories were making too many motor cars. In general, too much of everything was being mass produced, much higher than demand needed. e.g. Once the boom in kitchen freezers had been sold across America there came fewer demand and investors would pull out or invest in a competing company as more and more of them sprung up in the boom. Farmers had to destroy their own produce to keep prices up. The peak of the economy had been reached and now it was about to go down. Top businessmen could see the changing tide. Some pulled out and sold their stocks and they willingly knew the consequences that their actions would cause the market to go down and cripple their opponents as the trading world in high finance became cunning and crooked.

Brokers and bankers were battling it out and keeping the market steady. High investors stayed in and tried to repair the damage as others pulled out. Bankers and high financiers invested more of their money in the hopes that it would stop a panic as it was now unsteady and rapidly climbing and then falling and then climbing again in late October 1929. Bankers now panicked and they demanded their shareholders should pay their credit / loans in order to secure their investments in the market. This meant the general public were putting more money in the market just to secure their share interest, or else become wiped out. Sadly it did not matter how much money they threw in.

The market was now on a rapid decline. The more it went down, the more people panicked and sold their stocks. The banks tried to save the situation, but in the end the banks were wiped out along with all of their share holders. Since many people were investing on borrowed credit it meant they could no longer afford to keep the luxuries they had at home. The roaring twenties saw the creation of the wealthy middle class, and the creation of many jobs, and by October 29th it was all taken away. Nobody could afford luxuries any more. Businesses went bust. Company bosses lost everything and closed their factory doors. Millions joined the breadline. Banks closed and the effects were felt all around the world as the chain reaction (domino effect) hit the economies of the world as America was a big trading partner and was effectively pulling out of the limelight as the crash became a national crisis. It was the dawn of the Great Depression which engulfed the 1930's.

Here is a short video I made about the crash of 1929 and the passenger liner Berengaria.

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Dan Kappes

Dan Kappes

Thanks! That explains a lot! Just like the Titanic, too much fun, arrogance, and overconfidence can lead to a downfall.o_O