1. What was the role of the stock market and speculation in the Great Depression
ID: 1096501 • Letter: 1
Question
1. What was the role of the stock market and speculation in the Great Depression of 1929?
2. What was the role of technology in the expansion of the stock market in the 1920s?
3. What was the "consumer revolution" of the 1920s?
4. How did the availability of credit change?
5. What is "buying on margin"?
6. How did stock manipulation work? Was it legal?
7. Was President Calvin Coolidge for or against government regulation of financial services companies?
8. Who was President at the start of the Great Depression?
9. What was the view of the Fed of the stock market boom in March of 1929? Did the Fed take any action then? Why or why not?
10. What are "margin calls"? What was their role in the crash?
11. What was the role of astrology in the stock market boom?
12. How was the stock market performing in May of 1929?
13. What day was the "all time high" of the stock market in 1929?
14. When did the collapse of the stock market begin?
15. How did Roger Babson view the stock market boom?
16. What happened on "Black Thursday"?
17. How did the Bankers try and stop the panic at the stock market?
18. Who was affected by the crash?
19. Were there new stock regulations in the 1930s?
20. What are three similarities in the causes of the Great Depression and the Great Recession of the 2008 Financial Crisis?
Explanation / Answer
Soln:
1) Stock market played a major role in the Great Depression of 1929 because many believed that the stock market would continue to rise indefinitely. Before the Great Depression investments where made that where very speculative. This meant people invested without regards to doing research to make sure what they invested in was really a good investment. Also the 1920's was a time known as the roaring 20's such exuberance and confidence in the fast growth of the stock market made investors feel over confident about there future investments. Over confidence can cause to make poor decisions. The overconfidence causes to not make decisions based on facts and home work. They bought investments that where not profitable and over paid for investments that where profitable. People with such beliefs that this real estate or stock will go up up and up became ingrained in the market and it caused a major over pricing of most or all stocks. When the tightening of credit cause the market to finally crash it crashed faster and harder then before because of the over speculation. Speculation could be very similar to gambling.
2) The period of 1920's marked a major change in technological development.There is a rapid adoption of the automobile . The rapidly expanding electric utility networks led to new consumer appliances and new types of lighting and heating for homes and businesses. The introduction of the radio, radio stations, and commercial radio networks began to break up rural isolation, as did the expansion of local and long-distance telephone communications. The period saw major innovations in business organization and manufacturing technology.
3) The 1920s saw a flood of new affordable consumer products, items that had not always been accessible to most people or to the majority of Americans until mass production, assembly lines and easier accesses to raw materials made goods ever less expensive. The supply side of consumerism saw in the 1920s the continued technological and organizational transitions that had begun in during the industrial revolution during the following decades after the Civil War. Mass production and mass distribution
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