Why did the stock market crash in 1929?

Answer 1

Consumer outlook became very pessimistic and the economy contracted sharply. Companies were hard hit by the decrease in consumer spending and this trend would continue for nearly three years. People began to panic and started selling all their stock back. Panic selling brought the market to the ground. The laws of supply and demand were in place - with no one left willing to buy stocks and everyone trying to sell at the same time, the market had nowhere to go but down.

Answer 2

There was over speculation in the Stock Market, which was not regulated.

Many Americans purchased stock on credit. This was known as margin buying. Banks were permitted to speculate in land and the Stock Market with little government regulations. Stock Brokers and businessmen kept telling the public that stocks would continue to rise yet there was no examination of stocks being sold to determine if they were actually sound financially.

Answer 3

In the years leading up to 1929, with the finding of gold in Alaska, South America, and Canada, the U.S. economy, which held the gold standard at that time, was receiving a large influx of wealth. This led to consumer confidence because if the country was doing so financially well, then logic leads one to believe that the country's businesses will be doing equally well. One way people took advantage of this influx was the stock market. Eventually people started investing more money than they had in the stock market, using loans from lenders. It got to the point where the amount of money being traded on the stock market from lenders and the amount of money sitting in shares exceeded the amount of money in circulation at the time. This basically means the stock market was overinflated with money people didn't actually have. Eventually people would have to sell their stock and pay back their loans. On Black Thursday, too many people sold their stocks and the market crashed, with prices falling to phenomenal levels.

Answer 4

The Smoot-Hawely Tariff Act

Answer 5

Because