![stock crack of 1929 stock crack of 1929](https://ih1.redbubble.net/image.364020018.6260/flat,800x800,070,f.u2.jpg)
Firms listed on one of the regional exchanges were subject only to relatively toothless state regulations known as “blue sky laws” that were designed to keep companies from selling investors valueless securities such as shares in the sky. Part of the popularity of the regional exchanges was due to the lax listing requirements that made them particularly attractive to firms engaging in dubious issues such as highly leveraged investment trusts. Though NYSE business also increased, its proportion of the overall securities market decreased while business at the formerly sleepy regional exchanges increased several times over. The stock market bubble of the Roaring Twenties is legendary less so is the rise of the regional exchanges, particularly the Boston Stock Exchange. Whether or not the stock market crash itself can be blamed for the ensuing years of The Great Depression, the effect was a blow to business confidence and a sharp reduction in the feeling of wealth that many Americans had begun to enjoy.Unique historical materials in Harvard University collections throw light on the role of the regional exchanges in the stock market crash of 1929, and the regulation of the securities industry during the New Deal. The economy had been showing signs of weakness for months before the stock market crash, and with or without it, a downturn in the normal business cycle was taking place. Although there were recoveries, the Dow Jones Industrial Index retreated again and again until it reached its low in the summer of 1932. By mid-November, the value of shares on the New York stock exchanges had declined by 40%, a loss of $26 billion. On Tuesday, October 29, the stock market collapsed completely. Wall Street luminaries joined in an effort to support prices, but the impact was temporary. Stock prices dropped at unprecedented rates, with volumes reaching levels so high that the ticker tape could not keep pace. On October 24, 1929, the crash took place. The peak in market indices took place in early September, and this was followed by a gradual but persistent drop. The policy of pressure and increased rates, however, did little to stem the tide of speculation and money was made available to brokers through nonbanking loans.Īlthough there were worrisome declines in March across the board and in certain stocks during the summer, there was no stock market crash until the fall. As 1929 began, the Fed began to directly pressure member banks to stop increasing their loans to brokers. At the same time, their holdings in government securities were reduced and open market rates rose, with the call loan rate reaching 8.6% by December.Īll of this did not prevent continued speculation in the stock market. Between April and June, an additional increase to 4.5% took place at all but the four western Reserve banks. In January and February, discount rates at the Federal Reserve banks were raised from 3.5% to 4%. It wanted to see a moderation so as to prevent an eventual stock market crash. In the early part of 1928, the Federal Reserve Board began to feel a little uneasy about the situation in the stock market, where prices had been rising with alarming rapidity. The poorhouse is vanishing from among us." A little more than a year later, the United States would be rocked by a stock market panic and a worldwide depression that persisted into World War II. In the summer of 1928, President Hoover expressed the feelings of many, saying "We in America are nearer to the final triumph over poverty than ever before in the history of any land. Many Americans were convinced that everyone, regardless of one`s station in life, could become rich.
![stock crack of 1929 stock crack of 1929](https://i5.walmartimages.com/asr/2e1dd989-d746-4f63-bcd2-8d1b8f118c57.330c4fad9db023897d789994d383589b.jpeg)
This was especially true of such issues as communications and the automobile industry where companies were profitable and worker productivity steadily increased. The tremendous increase in stock market prices during the 1920s was largely based upon value.