The 1929 Stock Market Crash Proof That Perfect,Never Lasts Forever By: Ellie Kelk
March, 2015
My Research Outline
1. Introduction
2. How The Stock Market Is Structured
a. Stock
i.
Buying Stock On Margin
ii.
The New York Stock Exchange and Commission Houses
iii.
The Dow Jones
iv.
The Federal Reserve Board
b. Bonds
3. What Went Wrong In The Roaring Twenties?
a. Things That Were Going Great For America
b. What Was Going On For America
4. The Crash
a. Philip Snowden Quote
b. Black Thursday
5. The Aftermath
a. The State America Was in After The Crash
b. The Great Depression
i.
The Job Situation
ii.
Poverty
6. What Good Came From The Crash?
a. Franklin Delano Roosevelt
b. The Projects He Worked On
i.
His Most Famous Project
ii.
FDIC
iii.
CCC
iv.
Social Security
7. Conclusion
Introduction
People were on top of the world, the war was over, and everyone
thought there would never be another. But there would be something as
horrible as a war if not more. The Stock Market Crash of 1929, proof that
perfect never goes on forever.
How The Stock Market Is Structured
The Stock Market is a complicated system to help businesses while
making a profit, by buying part of the company. But, while it can be
rewarding, it is very risky.
In the 1920’s, since people were convinced good times would last
forever so, they saw stocks as a great opportunity. They could take any
amount of money, and make it bigger.
The problem was, that was only if the company did well. You see,
when you bought stock you were buying a tiny, or large piece of the
company, depending on how many shares of
stock you bought. If the company did poorly and
lost money, so did you. But, if the company did
well, you could sell your shares for more money
than you bought it, because now it was
worth more.
Even if you couldn’t afford the stock you
wanted to buy, you could do something called buying stock on margin. You
would use as much as you had to buy part of the stock you wanted and then
the stock broker would pay the rest with a loan. If the company did well, you
could use the money you got to pay off the loan. If the company did not do
well, you would have to sell your stock and pay the loan. This was yet
another way the stock market was even riskier.
This all happened in the New York Stock Exchange, which is located at
the corner of Wall and Broad Street. But, not everyone could get there so
there were brokerages all around the country
called commission houses. In these places brokers
would trade stock and then call the stock exchange
and put in the order.
To know what was happening in the stock
market, you could look at the Dow Jones. This is
an index the lists the 30 main stocks and their
stock value. Since the Dow Jones represents
the stock market as a whole, if the Dow Jones
percentage was good the stock market was in
check, and if it was low, we were in big trouble.
Someone needed to keep the stock market in order, this is the job of
the Federal Reserve Board. This is a group of people from the government
who were very scared in September and October of 1929.
There was also another way to make money in the stock business. This
was called bonds. Bonds are not as risky as stock. You give the government
or a business a certain amount of money, that you get back after a
determined amount a time with a percent of interest decided while making
the deal.
Unfortunately, everyone seemed to like stock better, not seeing the
risk, it caused many problems for America.
What Went Wrong In The Roaring Twenties?
The twenties were an amazing time for America because we were at
the end of World War I, and while other countries were destroyed and in
debt, America was unblemished and America was the country the others
were in debt to. Since other countries were in debt America could sell the
new products we were coming up with and make a nice profit.
In the twenties, the entertainment business was booming. The radio
had just come out, Amelia Earhart was flying over the Atlantic, Babe Ruth
was hitting home runs, and Walt Disney had just came out with Plane Crazy.
The nightclubs were full of people doing the new dances like the Charleston
and the Jitterbug.
With all of these great things going on the Americans thought the good
times would never end, and this explains what was happening in the stock
market. You see,in the stock market people were investing like crazy, you
could even say they were playing with money they didn’t have. More and
more people were buying stocks on margin expecting the stocks to go up.
But, things weren’t going well in September and October of 1929.
Other countries didn’t need help anymore, so manufacturers would make too
much product, the utilities decreased in price, and as a result the stock value
went down. Since the stock percentage went down people couldn’t keep
their stocks bought on margin. The Dow Jones percentage had 3 days that
had a record low percentage. October 3rd, October 4th, and October 16th,
1929. Things were coming down like dominoes, one causing another causing
another, until Black Thursday, October 29th, 1929.
The Crash
Philip Snowden, England's equivalent to our secretary of treasury,
came to America in the early days of October 1929 and predicted a crash. I
think this is because he was not under the spell many Americans were at the
time. Americans thought that good times would go on forever or maybe it
was that Americans were too close to the puzzle to see the big picture.
Something wasn't getting through to the U.S. that came through for Philip
Snowden.
Right now, you may be thinking that people had to be dumb not to see
what was going on, I thought the same. But it wasn’t that easy, magazines
said everything was perfect and as far as everyone knew it was true.
Philip Snowden was right, the day did come when1 the stock market
crashed, that fateful day was October 29, 1929. This day is known as Black
Thursday.
On Black Thursday, things went wild. People
were running everywhere, anywhere, to sell their
stocks once they saw that the market was
1
crashing. In the New York Stock Exchange, the whole place was crazy, and
when it closed people set up on the streets to sell
stock.
So, some bankers had an idea. They all got
together and had a meeting, at this meeting the bankers decided that to fix
the market by putting several million dollars from their banks in the stock
market. This 20 minute meeting temporarily fixed the stock market. And
they were very smart for doing it.
On the next day more and more people still sold their stock and the
Dow Jones percentage declined 12.8 percent the largest drop ever in the
stock market. On the day after that the same thing happened, people were
at each others throats. In the days after the crash the stock market
plummeted in all aspects, until it hit rock bottom.
The Aftermath
After the stock market crashed, no one was in a good situation. Since
a lot people made investments in the stock market, many, many people
were up to their ears in debt. Almost 12 MILLION people lost their jobs, ( 25
% of the nation's workforce ) and since banks invested with everyone’s
money, banks went down not being able to return the money people put into
the banks. With all these things going horribly wrong and America in an
awful state, this time was called The Great Depression.
Many of those who didn’t have jobs struggled to support their family,
having kids look through trash cans for scraps of food, and growing
vegetables in spare patches so they could eat. More and more people came
to soup kitchens, waiting for hours to get
anything before the food ran out. But things
weren’t perfect for those who still had jobs
either. Wages were cut in half, and some
companies were barely operating.
Not many
Americans
had savings,
so it became
harder and harder to pay the mortgages. People
lined up on the street corners and against
buildings, homeless. Some people made
shacks out of any materials that could be
found. Little communities of 2 these shacks
were made, and they called them Hoovervilles. This was because when The
Great Depression started the president was Herbert Hoover. Some blamed
him for the crash, saying he didn’t help enough.
This was one of the worst times for America, but we managed to get
through, and make some great changes too.
What Good Came From The Crash?
Although many were, not all things that happened during The Great
Depression were bad. We made some great economic and social strides in
2
The Great Depression, most of which were lead by our president at the time,
Franklin Delano Roosevelt.
Franklin Delano Roosevelt was just what America
needed at the time of The Great Depression. He
was elected because he said he would actually do
something to fix the economy, unlike Herbert
Hoover our past president. And he actually did fix
our economy by starting economic and social
policies. One of the famous things he did was
get us out of debt by spending money. This
confused many people but worked very well.
He borrowed money to start project for things
that needed to be done, and this got people jobs because they needed
manual labor to get these projects done. That got the people money, and
the government money because a fraction of the money the people got was
collected in taxes. This money was used and started more projects.
One of the projects that Franklin Delano Roosevelt
started was the FDIC (Federal Deposit Insurance
Corporation) the FDIC ensured that bank failure3 s
would not make you lose all your money. That
means if a bank closed down you would still get all
the money you held in your account up to
$100,000.oo.
Then, he created the SEC (Securities and Exchange Commission)
which made 4 sure that stock brokers made fair trades,including buying stock
3
4
on margin. He also created the CCC (Civilian Conservation Corps) which got
men jobs in parks and forests,
planting trees and making trails.
The 5 men made one dollar a day
but had food and houses on the
land where they were
employed. The last
important policy Franklin
Delano Roosevelt created
was Social Security. This was a program that gave
money to the elderly, poor and unemployed. The
money was collected by taxes and given to Social
Security which was ok because then when you were
unemployed, elderly or poor it would be there for
you.
And to think we would never have any of
these great and helpful policies if we didn’t have The Great Depression.
And a few of our architectural marvels were built
during the great depression, against all odds. A few
of the monuments are The Golden Gate Bridge,
Lincoln Tunnel and Empire State Building. Three of
the things America is known for.
Conclusion
Adults, starving on the streets with nowhere to live, children,
scavenging through trash cans, looking for scraps, business in disrepair, if
5
not shut down entirely. Why did this happen? The Stock Market Crash of
1929, proof that perfect doesn’t last forever.
Works Cited
1. Gitlin, M., & Sylla, R. (2008). ​
The 1929 Stock Market
Crash​
. Edina, Minn.: ABDO Pub.
2. McDaniel, M. (2012). ​
The Great Depression​
. New York:
Children's Press.
Pictures Cited
1.
<​
http://www.oldstockresearch.com/images/3copy.jpg​
> 2.
http://www.photosofoldamerica.com/webart/large/152.JPG​
> 3.
<​
http://econhist.econproph.net/wp­content/blogs.dir/2/files/2013/11/black­tuesday.jpg​
> 4.
http://2.bp.blogspot.com/_3Wyc4GNbNrM/S8rxyUmrHEI/AAAAAAAAAZc/uG3cV7VPTDY/s1600/se
c_us­securities­and­exchange­commission.png​
> 5.
<​
http://us­history.com/wp­content/uploads/2012/03/us­history­great­depression­picture.png​
> 6.
<​
http://www.english.illinois.edu/maps/depression/images/migrantmother.jpg​
> 7.
<​
http://www.independent.co.uk/migration_catalog/article5119483.ece/alternates/w620/franklin­d­roo
sevelt.jpeg​
> 8.
<​
http://4closurefraud.org/wp­content/uploads/2011/01/fdic.jpg​
> 9.
<​
http://www.ajes.org/wp­content/uploads/2011/02/CCC­Logo_jpeg.jpg​
> 10. <​
http://s.hswstatic.com/gif/social­security­1.gif​
> 11. <​
http://www.themuseatdreyfoos.com/wp­content/uploads/2014/06/golden­gate­bridge­in­millbrae­cal
ifornia­top.jpg​
>