How Did The Stock Market Crash Cause The Great Depression

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Peter Griffith U.S. History Mrs. Fishman 2-24-14 The year is 1929 and you’re living life to the fullest possible. You are finally able to walk down the street in a fur jacket and diamond rings and hand 20$ bills to the bums of the city if you wanted to. It wouldn’t be much use, because they would be nearly as rich as you would be. Even the people in poverty were somehow involved with or put money into the stock market. Nothing said you had to know how the stock market worked, you just let your broker do everything for you. There are three main questions that I was battered and bothered with when doing this report; What caused the crash? How and why was the crash responsible and noted to greatly effect the Depression? Is it possible for…show more content…
The reason for the people selling all of their stocks at the some time is too complex to explain in the introduction. When they did sell, the buyers would only buy at an extremely low price. Because of this imaginary price drop, the stocks used as collateral for loans were now worthless (in the eyes of the people and the bank owners) and so they demanded real money. The people had plenty of this, but all of it was in stocks...that were rapidly dropping in value because of some ignorant, greedy and bewildered stockholders were buying their stocks for low prices. As soon as everyone found out (thought) the stocks were worth much less, everyone sold and additional cash was needed to pay off all of their debts. 

 Why did the stock market crash of 1929 effect the US in such a magnitude as it did? There are multiple answers to this question. One answer was because people didn’t buy stocks with money, like you would food. They bought stocks with other stocks and the assurance that the money they would give was in stock already. This same main idea was used while buying normal items and even the banks used this technique. They would use the money people gave to them and
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