Untitled document (3) Essays - Economy, Stock Market Crashes

Most people mark the beginning of the great depression with the day known as Black Tuesday. What happened on Black Tuesday why is that day so important. A corporation is a business which individuals by stock in. The more stock one owns the larger share of the corporation that person has. These stocks are bought, sold, and traded on the stock exchange which is located on Wall Street in New York City. The success and failure of these corporations is gauged by the Dow Jones industrial average. The Dow Jones is an index which shows how large corporations are performing on the stock exchange. If the Dow Jones average goes up this means that corporations are prosperous and their shareholders are making money. If the Dow Jones average goes down this means that many of the corporations are facing economic hardships. Throughout the 1920s the Dow Jones industrial average had steadily gone up along with the unprecedented economic growth in the United States. In fact it had continued to rise for nine years in a row. However, in 1929 the stock market saw major fluctuations. Throughout the year there were ups and downs as investors bought and sold in sporadic fashion. During the summer months some economic analysts predicted a major slump but most did not heed this warning. Thursday, October 24, 1929 was the first day that saw a dramatic shift. When the stock exchange on Wall Street opened there was heavy trading with many choosing to sell their stocks and get out of the market. This caused an 11% drop in the value of the market. A group of leading bankers even held a meeting to see if they might be able to find a solution to the panic that had ensued that day. Monday, October 28, saw even more activity. The Dow Jones industrial average spiraled further downward. This meant that many investors desired to sell their stock but no one wanted to purchase those stocks for the prices they were being sold at. The next day Tuesday, October 29, 1929 was the day that will forever be r emembered as Black Tuesday. That day the Dow Jones industrial average fell 30 points losing 12% of its value. More than 16 million shares were traded, a record that would stand for more than 40 years. With so many investors looking to dump their stocks hysteria ensued and thousands of people lost their personal fortunes. The stock market had lost more than $30 billion in value over the course of two days and the event became more known as the stock market crash. The stock market continue to fall even lower over the next two weeks before finally stabilizing in mid November. June of 1930 saw another slump in the market and yet another downward spiral occurred in April of 1931. Investors had lost faith in American economy. The decline in stock prices caused bankruptcy and business closures for many corporations. Expansion and innovation became more difficult as no one wanted to invest their financial capital and take risks. As a result it would take more than a decade for the US econom y to recover. This is why black Tuesday is considered the event that started the Great Depression.