Analysis of The Effects of The Wall Street Crash of 1929

The United States of America today is infamous to having the greatest economy. At least, that is according to Investopedia, one of the best informative marketing organization. Thus the nation became infamous as the “Land of Opportunity.” There are several benefactors to a great economy, however there are also downfalls. The Stock Market Crash of 1929 was a result of the combination of increasing share prices, abandonment of banks as well as unsustainable inflation throughout the 1920s. This resulted in substantial unemployment; roughly 30% of the domestic workforce was now unemployed, major corporations went bankrupt and the many of the public had to sell their businesses. Overall the economy was terrible, the great slogan of the United States was portrayed as a lie to the public. In this paper I will elaborate on the many impacts of the Stock Market Crash. Despite all of these negative benefactors, the Stock Market Crash paved way for political reform as well as an economic and industrial revolution. Throughout history, America was known to have the best economy, this phenomenon was so well known, that the region was referred to as the “Land of Opportunity,” simply because for the sheer number of investment opportunities. The “American dream” concept was so well known, that it brought millions of immigrants to travel to the United States to start a new life. One benefactor that resulted from this amazing economy, were shares. The general public could take advantage of these so-called shares, were so profitable that many individauals made millions off the industry. This is how one location in the industrial New York City, one location became infamous for the stock market. This location was known as Wall Street. Brokers would offer you to buy shares of a company, essentially you own a part of that company. If the company does well, the value of that share increases, therefore you make a profit. If the company doesn’t do well, the value of your share decreases, therefore you lose money. In 1929, the value of shares had decreased dramatically due to the number of major corporations that that gone bankrupt unexpectedly. Millionaire Wall Street brokers as well as shareholders who had invested in a large number of American corporations had lost all of their investments in terms of value. There were several economic disasters all happening at once in accordance to each other. All of these disasters some of which included the Bank Run and inflation had acted as a catalyst towards each other.

The abandonment of banks in the United States was a major contributor to the stock market crash. Banking was significant in all regions located in the United States. Many businesses owners would deposit their earnings in banking systems, which made it evident that the banking system was significant. This was the primarial fundamental to anyone who makes profit and invests in savings. Before the market crashed in 1929, there was a point of time where the public was finally informed about the state of the economy. This was when all Americans decided they need to retrieve their deposits so that they do not lose more money. 16.4 million shares were traded in one day. Major banks were forced to shut down because they had gone bankrupt. There was no currency circulating around the market. Basic consumers whom of which had invested in the banking system were left empty handed. Billions of savings were lost because of the number of individuals returning deposits. This is what caused the “Bank Run,” this event started in Nashville Tennessee in the 1930s, where people would withdraw all of their virtual savings in their account. This had a devastating effect on banks to the point where they were absolutely unreliable. Unsustainable Inflation played a major role in destroying American economy. Inflation is the ideology that general products increase in price over time. Inflation is more common when the value of a currency decreases. After the great market crash, in order for corporations to continue making profit off of their business, they had to increase their products. This consequently forced the public to purchase those same process for a large sum of currency. During this time period, the value of the dollar was decreasing significantly. Therefore, the public began to lose money. This was devastating for the public since banks were not returning deposits while the value of the dollar was decreasing. People simply couldn’t afford to purchase products that were increasing in value. This affected both the public and major companies. In accordance, due to the immense loss of funding, those companies were forced to cut wages or even cut employment entirely. One benefactor that contributes towards a developing economy are the number of people employed. This explains why countries like China as well as India have extremely sustainable economies. These nations specifically rarely experience economic disasters. Their huge yet increasing number of employed individuals all contribute towards the national GDP, which means that domestic production and exportation is very productive. In the United States, employment ratings were very good. The stock market crash had caused serious economic downfall, following to this event was the Great Depression. This event was likely the most devastating economic downfall in American history. At its lowest point, around 15 million Americans were unemployed. The stock market crash did only affect shareholders and brokers, due to companies being unable to sustain themselves, they had to cut wages and employment opportunities. The average family income fell by 40 percent from 1929 to 1932. Income fell from $2,300 to $1,500 per year. Today that is worth $19,000 in value. No one could afford basic necessities. Despite all of the negative impacts the Stock Market Crash had on the general public, there were several benefactors that came out of such a devastating economic disaster. All companies had lost their money, families had gone homeless and overall nothing was getting better. Through every American’s mind, President Herbert Hoover was widely blamed for being responsible for the stock market crash. Realistically, the market crash was a buildup result of his predecessors regulations. Many of the Americans who were unemployed waited in bread lines and lived in locations derisively referred to as Hoovervilles. Once reelections were announced, president Hoover had lost to President Franklin D. Roosevelt by a landslide. This new president had promised to provide a better economy to all Americans whom of which were devastated by the economic collapse. This was just what the general public desired, so this president was easily elected. Recovery from the Great Depression began in early 1933. The political reform had addressed realistic political representation, especially after the market crash. The new president had a plan to provide stability to the economy by providing millions of new jobs to Americans. This had sparked the next economic and industrial revolution in the United States.

After the recession, emerged an economic and industrial revolution. President Roosevelt had ordered the construction of the WPA; or the Work Process Administration, whom of which introduced 8.5 million jobs to Americans to work on projects that would not compete with private businesses. This was followed by the New Deal, the FDA, the CCC and many other federally owned operations that targeting promoting jobs for young individuals. Slowly, the employment ratings in the U.S. starting increasing dramatically. This was the first step in recovering from such a disaster. As private businesses grew, without any competition they soon evolved into the major corporations, national imports and exports began to grow significantly. These government operated organizations such as the FDA, ensuring manufacturing prices remained stationary to ensure local businesses could grow despite heavy constraints caused by inflation. This ensured companies would be able to profit out of their businesses, furthermore contributing to the domestic GDP. Overall, watching the national GDP increase is a clear indication that the economy is doing better. This is because a rising GDP is a transparent indication that more manufactured goods are being exported, more people are being employed and more money is being made overall. The organization introduced by the government did a good job ensuring that the economy started doing better.

The government had provided an excellent environment for local businesses to grow substantially. Some of the businesses that were founded during the recession include McDonalds, United Airlines, Macy’s, General Foods and many others. As businesses began to recover and profit, demand for new technologies began to rise. In the late 30s, the continuous audio recording device was introduced. In the early 40s, logging trucks were modernized, oil rigs were deployed in the Gulf of Mexico and many other profitable events. In the next three years, new agricultural technologies were introduced which revolutionized the processing industry. Directly after the last market crash, business owners had lost confidence in their local banking system as well as Wall Street. At around this time, the economy had exponentially improved as compared to how it was before. People started investing in shares and others began to invest in the corporate banking system.

Overall, the Stock Market Crash of 1929, had several negative benefactors. The United States had spent around $30 billion to account for World War I. During the Stock Market Crash as well as the Great Depression Americans lost $44 billion dollars. The market crash proved to be more devastating than World War I. Due to the dollar losing value, companies were forced to cut wages and employment. The average income for families had dropped by 65%. Despite all of the negative factors caused by the market crash as well as the Great Depression, this event paved way for a political, economic and industrial reform. This revolutionary period of time was responsible for the construction of major corporations. Through a recession real GDP income, employment, manufacturing and retail sales had finally emerged. Throughout this entire ordeal, a real economy materialized, which was then able to support the millions of Americans throughout the United States. Historians may have various opinions on how the market crash did not benefit the economy, however, in reality, the Stock Market Crash made it possible for political reform as well as an economic and industrial revolution. As Bill Gates once said, “It's fine to celebrate success but it is more important to heed the lessons of failure”.