After the crash, panic made a bad situation worse.
Public panic in the days after the stock market crash led to hordes of people rushing to banks to withdraw their funds in a number of “bank runs,” and investors were unable to withdraw their money because bank officials had invested the money in the market.
This led to massive bank failures and further deepened an already dire financial situation.
Many analysts claim that the financial press also played a key role in contributing to the sense of panic that exacerbated the stock market crash.
The day before Black Thursday, the Washington Post ran the headline: “Huge Selling Wave Creates Near-Panic as Stocks Collapse,” while The New York Times announced: “Prices of Stocks Crash in Heavy Liquidation.”
There was no single cause for the turmoil.
Most economists agree that several, compounding factors led to the stock market crash of 1929.
A soaring, overheated economy that was destined to one day fall likely played a large role. Equally relevant issues, such as overpriced shares, public panic, rising bank loans, an agriculture crisis, higher interest rates and a cynical press added to the disarray.
Many investors and ordinary people lost their entire savings, while numerous banks and companies went bankrupt.
While historians sometimes debate whether the stock market crash of 1929 directly caused the Great Depression, there’s no doubt that it greatly affected the American economy for many years.
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