key term - US stock market crash

Definition

The US stock market crash refers to a significant decline in stock prices on the New York Stock Exchange, most famously occurring in late October 1929, which marked the beginning of the Great Depression. This event created widespread economic turmoil and uncertainty, leading to a global economic crisis and affecting millions of lives worldwide.

5 Must Know Facts For Your Next Test

1. The stock market crash began on October 24, 1929, known as Black Thursday, when panic selling began to surface, leading to a dramatic drop in stock prices.
2. On Black Tuesday, October 29, 1929, the stock market lost nearly $14 billion in value in just one day, triggering widespread financial panic.
3. The crash wiped out millions of investors and led to bank failures, business bankruptcies, and a sharp increase in unemployment rates across the United States.
4. Many factors contributed to the crash, including over-speculation, excessive borrowing for investments, and a lack of regulatory oversight in the stock market.
5. The stock market crash is often seen as a catalyst for the Great Depression, which profoundly affected economies around the world and led to drastic changes in government policies.

Review Questions

• How did the events leading up to the US stock market crash reflect the economic conditions of the 1920s?
  • The events leading up to the US stock market crash were heavily influenced by an economic environment characterized by rapid growth and speculation. The 1920s saw a boom in consumer culture and rising stock prices fueled by easy credit and excessive investment speculation. However, this created an unsustainable bubble; as prices soared without corresponding economic fundamentals, it set the stage for a massive correction that ultimately led to the crash.
• Discuss the immediate social impacts of the US stock market crash on American society during the early 1930s.
  • The immediate social impacts of the US stock market crash were devastating for American society. Families faced severe financial distress as savings were wiped out and jobs became scarce. This resulted in widespread poverty, with many people losing their homes and struggling to afford basic necessities. The psychological effects included loss of hope and increased anxiety about the future as communities grappled with unemployment rates that soared dramatically.
• Evaluate how the US stock market crash influenced global economic relations in the years following 1929.
  • The US stock market crash had profound implications for global economic relations following 1929. As the American economy faltered, countries reliant on US loans and trade faced severe repercussions, leading to a domino effect of economic decline worldwide. Many nations implemented protectionist policies to safeguard their own economies, exacerbating global trade tensions. This interconnected crisis contributed to widespread political instability and laid groundwork for conflicts that would later emerge during the 1930s and beyond.

Related terms

Great Depression:

A severe worldwide economic downturn that lasted from 1929 to the late 1930s, characterized by massive unemployment, deflation, and a significant decrease in industrial production.

Black Tuesday: The day, October 29, 1929, when stock prices plummeted drastically on the New York Stock Exchange, leading to panic selling and marking the most catastrophic point of the stock market crash.

New Deal:

A series of programs and reforms introduced by President Franklin D. Roosevelt in response to the Great Depression, aimed at economic recovery and social reform.