Question about the crash of 1929.

Well after the March Crash of 1929 the government may have been able to enact anti-speculation laws and likewise encourage Federal Reserve and private banking "security" for when credit is needed. National City Bank for example offered about $30 million for the March Crash of 1929 and turned a 21% demand for call money shrunk down to 8%.

Next you face the issues in that the Smoot-Hawley gained most support due to the London Crash in September of 29' and as such some still fell this tariff was a chief factor but it was a clear sign America was no trusting foreign economies.
 
Didn't they also allow pre-Crash the purchase of stocks on credit, thereby creating a huge gap in real economic value when crunch time came and there was nothing to pay the piper?
 
Didn't they also allow pre-Crash the purchase of stocks on credit, thereby creating a huge gap in real economic value when crunch time came and there was nothing to pay the piper?

Buying on margin. You can still buy on margin today yet it requires 70% to most firms. In the 1920s you could go buy a stock on margin and only put down 20%. So the issue is that you could make these risky moves and get good payoffs but you sometimes (and in the crash almost all experienced this) owing more then you took on margin leading to debt.
 
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Buying on margin. You can still buy on margin today yet it requires 70% to most firms. In the 1920s you could go buy a stock on margin and only put down 20%. So the issue is that you could make these risky moves and get good payoffs but you sometimes (and in the crash almost all experienced this) owing more then you took on margin leading to debt.

Expect Congress to soon lower the margin to 0%:eek:, (1) all in the name of "freeing the market from Big Government".

1) I'll take 50,000 shares of US Fireflies, 4000 shares of Consolidated Lint, and one million shares of Disney:p:D:cool:
 
Plus the Crash was actually a reflection of multiple underlying causes. Number one was the real estate crash that happened previously, number two actual cross funds purchases. I think (IIRC from Galbraith's 'The Great Crash') that it was the cyclical thing. The expectations were unrealistic, since actual underlying fundamentals were greatly overpriced, sort of what happened during the tech boom in 99/00. The production capacity was too great for number of consumers and the earnings began to fall off. Also, a lot more people was in the market, though not as much as popular perception has it. Some of them got scared easily and started selling, dropping prices.

In effect, the prices of stocks were overblown and once they started dropping, no one could stop it. And they tried.
 
Plus the Crash was actually a reflection of multiple underlying causes. ...

Key point there kids. The stock market crash was a symptom of a declining economy, not a cause. One could make a long list of sectors that were showing slow or negative growth as the 1920s spun out. The sort of high risk investment patterns that developed through the decade are symptomatic of reduced returns in solid/safer investments. As returns on investment in businesses that actually do something decline a increasing number of people turn to higher risk venues, that are increasingly based on less productive, misunderstood, or fraudulent "opportunities". At some point the investment market starts to appear to be a pyramid scheme, or worse starts to function like one & the panic sets in.

Absent uninformed, and poorly thought out stock market investment in the 1920s the Depression still occurs, tho it would not have quite so sharp a starting point as the Crash of 29. Absent that the pop narrative would recognize other earlier and later failures of the economy, that were more fundamental.
 
Key point there kids. The stock market crash was a symptom of a declining economy, not a cause. One could make a long list of sectors that were showing slow or negative growth as the 1920s spun out. The sort of high risk investment patterns that developed through the decade are symptomatic of reduced returns in solid/safer investments. As returns on investment in businesses that actually do something decline a increasing number of people turn to higher risk venues, that are increasingly based on less productive, misunderstood, or fraudulent "opportunities". At some point the investment market starts to appear to be a pyramid scheme, or worse starts to function like one & the panic sets in.

Absent uninformed, and poorly thought out stock market investment in the 1920s the Depression still occurs, tho it would not have quite so sharp a starting point as the Crash of 29. Absent that the pop narrative would recognize other earlier and later failures of the economy, that were more fundamental.
All true. Plus, IIRC, there was declining birthrate at play, too, so declining real estate market & overall decline in purchasing. Plus a glut of agricultural production following WW1, due to efforts to increase production for the war--which, by opening marginal lands, helped contribute to (if not outright create) the Dust Bowl...:eek::eek:
 
Boll Weevils Cometh!

All true. Plus, IIRC, there was declining birthrate at play, too, so declining real estate market & overall decline in purchasing. Plus a glut of agricultural production following WW1, due to efforts to increase production for the war--which, by opening marginal lands, helped contribute to (if not outright create) the Dust Bowl...:eek::eek:

Not to mention a lot of farmers refusing to modernize their methods of fertilization, and not engaging in types of crop rotations that meant some years land would grow less profitable crops like peanuts, clover, and soybeans. "We been growin' cotton fer nigh on a hunert years, and no revenuer (Agricultural Agent:rolleyes:) iz gunna tell me my bizness! An' don't bother me 'bout dat silly nonsense 'bout weevils!":p

There actually was a guy in South Carolina (?) who refused to listen about the coming of the Boll Weevils, planted his cotton anyway, watched it get destroyed, planted another years' crop of cotton, watched THAT get destroyed, before finally getting in his car along with his (thoroughly disgruntled:p) wife and moving to California.:rolleyes:
 
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There actually was a guy in South Carolina (?) who refused to listen about the coming of the Boll Weevils, planted his cotton anyway, watched it get destroyed, planted another years' crop of cotton, watched THAT get destroyed, before finally getting in his car along with his (thoroughly disgruntled:p) wife and moving to California.:rolleyes:

More than one. Search though the old unniversity research papers & you will find piles of data on several million farmers who gambled on that one, and other crops or techniques that were becoming high risk. 'Dry land' tilling techniques had been disproved for fifty odd years, but many western farmers were still attempting them. I'd think a dozen other examples could be posted here.
 
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