The Crash of 29 and Its Effects

The 'Crash of 29' was the most devastating stock market crash in USA stock history and the toughest economic crisis that capitalism has suffered in history, many people were ruined and lost everything.

This crack was followed by a strong crisis known as the ´´Great Depression´´.

On October 23, 1929, without warning, New York's stock market prices plummeted. This was because there were no buyers and all investors wanted to sell their shares, so prices started to fall. Investors were surprised, as for five years the stock market had only gone up.

In 1919 USA emerged victorious from the First World War, which caused great economic growth in the country, that is, new technologies were implemented and there was a great increase in consumerism in the population, It also developed the installment sale to encourage society to buy you come from consumption and do it on credit. With the ease of getting credit and the increase in disposable income, the population was looking for new ways to get richer.

A group of elitist Wall Street bankers decided to bring to market corporate bonds and stocks, since they had an audience willing to invest in them to raise capital for private companies participating in the New York stock exchange, from this way they would also get a big profit. From this, all kinds of audiences were able to invest in stocks and they lost their stigma. This was made possible by technology, as quote tapes were found throughout the USA.

People had so much faith, they started borrowing to invest in stock exchanges. This way of buying shares was known as the ´´purchase of securities on credit´´.

The close relationship between elitst bankers and politicians helped the government reduce Wall Street control to a minimum. The market's own law and the usual insider abuse meant that the stock market of the 1920s was not fair or democratic.

In March 1929 he took the presidency Herbert Hoover, who was alerted to what was happening on Wall Street, but did not have the political courage to intervene, so when he became president, he did nothing to stop him, he was not willing to regulate the market , though he was not the only one who had that thought.

Unlike Herbert Hoover, banker Paul Warburg issued a small warning, but people ignored him. The most astute bankers noticed that the market was overheating, so they decided to leave during the summer. As John Kennedy said, 'If the boot cleaner knows as much as I do about the stock market, maybe it's time for me to quit.'

Herbert Hoover seeing the situation, asked a group of elitist bankers if he should be concerned about the Wall Street situation, and one of them replied that the market would correct itself, did not see the need for the government to intervene. Five days later the bag collapsed.

On October 24, 1929, “The Black Thursday”, crash began. People were afraid because the market kept falling. The popular reaction was 'this can't be happening.'

Bankers seeing the situation, they knew they had to do something.

Charles Mitchell, president of the ´´National City bank´´, entered the offices of JP Morgan, as he had been summoned to be present at the meeting to be held. Four other major bankers sat at the table. Among them were Richard Whitney, vice president of the ´´New York Stock Exchange´´, and the meeting was chaired by Thomas Lamont. At that meeting, they planned to invest $250,000,000. Those funds would be used for a list of key values. Whitney bought 25,000 shares at a much higher price than they were selling.

More people, such as John Rockefeller, were joined by more people, in order to restore confidence in the market, and it worked, the stock market went up again.

Most people bought the shares with borrowed money, as the profits were bigger and faster when the stock market went up, but by the time it started to fall, the losses were also huge, so those who had asked for money for shares, they had to cover it. Lenders called on people to contribute more cash or sell their shares, which resulted in the stock market falling again and people starting to re-sell their shares, in such a large way, that bankers could not control the situation. In 36 hours, 22% of the value of the industry in the USA was lost. Many people lost everything and numerous suicides began to occur, some of them did not see other solution.

This led to huge mistrust in the country's economy and in 1931 more than 3000 banks went bankrupt.

After all that, people were suspicious of the banks and kept their money under the mattress.

Companies were also lending money, and when prices fell, all that money disappeared, resulting in companies starting to do without their employees, resulting in a huge number of unemployed, which in turn caused demand to fall.

People were unemployed, they had lost virtually everything, thousands of families were evicted, poverty surrounded them everywhere.

In 1932, Hoover's Republican government came to the end. Franklin Roosevelt was elected as the new president of the government in the United States. He restored the confidence of the Americans and regulated the financial system.

When the country began to recover, they launched a 'Crash' investigation and discovered that as quoted by the ´´National City Corporation´´, they discovered that Charles Mitchell had sold shares to his wife to evade taxes, Richard Whitney when he bought the shares Black Thursday, he had lost all his money and had borrowed from his brother, but when that didn't come, he stole the money from his clients and ended up serving time. JP Morgan also charges some of the blame, as they discovered a list to offer preferred stock options to certain individuals.

Roosevelt wanted to clean up Wall Street's reputation at the time creating the ´´Stock market commision´´and elected Joe Kennedy to lead it, although Roosevelt did everything to lift the country, the great depression would last until World War II, which caused the globalized economy to spread crash all over the world.

In the UK there were a large number of jobs.

Germany was also one of the great affected, as it had not yet recovered from defeat in World War I. The crash caused numerous anti-capitalist movements, resulting in communists taking power in Russia. Fascist movements were on the rise, Mussolini came to power in Italy, and Hitler's political base was being forged in Germany, but it is another story.