1920's Spring Break Blog

Reasons for the Stock Market Crash of 1929:

• Credit Boom: rapid growth in bank credit and loans.
• Buying on Margin: you only had to pay 10 or 20% of the value of shares and you were basically borowing 80-90% of the shares. In the end, this left margin millionaires broke.
• Irrational Exuberance: people bought shares with the expectance of getting more money. As the prices kept rising, the people thought they had to do the same.
• Mismatch between Production and Consumption: production lines were moving along quickly, but it was a struggle to buy the items that were being made.
• Agricultural Recession: struggling to maintain profit, farmers were driven out of business because of the economic climate, better technology, occupational and geogrpahical immobilities.  
• Weakness in the Banking System: many small to medium sized firms. The banks were prone to go out of business if deposits carried on.