DeCoryon Alexander

March 10, 2025

Dr. Trent Huber

HIST 1302.702 US Since 1877 Midterm Exam

Everyone wants to live "the American Dream." Growing up, this concept was constantly

discussed, and everybody shared different versions of what it takes to obtain the American

dream. But in simple terms, financial stability, a sizeable home with a beautiful family,

alongside a couple of vehicles, and, finally, a reliable career, are all the makings of what it takes

to live the American dream. This all seems pretty simple and attainable, but just like everything

else in life, some things are easier said than done. The path to prosperity presents obstacles

along the way, and a precursor to what many individuals know as the Great Depression starts

with money. Significant and powerful, money surely makes the world turn, if you will. Many

argue the pretense of not needing money, and may live a modest life, which may actually work,

but ultimately, everything always starts and ends with money. Having said that, money can be

used in various ways to make more money. One of these ways falls in the form of the stock

market. Powerful but elusive to many, the stock market is like a game of cat and mouse.

However, those who understand and master it are able to reap the many benefits it ours. On the

other hand, America fell on the short end for some time in the 20th century when the stock

market crashed. In shorter terms, the stock market crashed when people heavily borrowed

money to buy stocks, which in term caused the stock prices to rise, and which ultimately resulted

in people becoming worried and selling their stocks. The end of 1929 was a terrible year for the

United States, and the stock market specifically crashed because of speculation, rising interest
rates, and a banking crisis.

First, speculation occurred for some time before the stock market even crashed in 1929.

Speculation, during which investors purchased into high-risk schemes that they hoped would pay

off quickly, became an every day thing ("U.S. History, Brother, Can You Spare a Dime?," n.d.).

Many people believe that it takes money to make money, and many took this concept to heart.

Some individuals will do or risk whatever it takes to become a "celebrity" over night, and this is

what happened in 1929. People were obsessed with ads that would advertise luxuries such as

cars and electronics, and would invest with borrowed money in hopes of eventually obtaining

these luxuries. Easy credit was not uncommon, and people borrowed and invested until stock

market losses started to occur.

Second, rising interest rates was a cause of the stock market crash in 1929. The public

caught wind of banks raising interest rates, which in turn led to investors liquidating their

holdings, thus causing the market to plummet ("The Stock Market Crash," 2019). Banks saw a

failing system when people were continuously allowed to borrow money to invest in stocks, but

these stocks proved to have little value, so the banks increased interest rates to slow down the

borrowing. However, the outcome was imminent, as the stock market took a huge blow as

people rushed to eliminate any loss they might have been subject to.

Next, a banking crisis assisted in causing the stock market to crash in 1929. Banks were

left with very little reserves when customers took their money out to avoid losing their savings.

Banks gave out loans to customers by borrowing money from the accounts of other customers,

but things fail when there is no money to borrow to pay back a customer, and both the bank and

the customer were ultimately at a loss. When the ink was clear, 9000 banks failed, causing a loss
of $7 billion in depositors' assets ("Social Security History," n.d.). Nevertheless, just like all

good things may eventually come to an end, all bad things must come to an end as well.

America endured the darkest of times during the Great Depression that resulted from the crash of

the stock market in 1929, but the country persevered and showed resiliency in the end. World

War II resulted in young men being drafted to fight in the war, in addition to the creation of

millions of jobs in the defense and war industries ("Great Depression Facts," n.d.). People were

suddenly employed and able to spend money again, thus bringing the economy out of the slump

that it was in during the Great Depression. Said jobs in the defense industries along with the

need for war materials were both instrumental in people spending and boosting the economy

back to what it was before the stock market crash.

In conclusion, the stock market crash of 1929 ultimately led to the Great Depression.

Speculation, rising interest rates, and a banking crisis were all catalysts to some of the darkest

times the United States has ever faced, but with determination and resilience, and perhaps the

"bad" World War II, America was revived and able to pull itself out of the bad times known as

the Great Depression.

Great Depression Facts - FDR Presidential Library & Museum. (n.d.).

[Link]

20President's%20efforts,in%20defense%20and%20war%20industries.

Social Security history. (n.d.). [Link]

The New York stock market crash of 1929 preludes the Great Depression. (2019, February

24). Goldman Sachs. [Link]

financial-crash

U.S. History, Brother, Can You Spare a Dime? The Great Depression, 1929-1932. (n.d.).

OpenEd CUNY. [Link]