History of the United States
Stock Market
The Great Depression

Why did the stock market crash in 1929?

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June 05, 2015 4:07PM

In the years leading up to 1929, with the finding of gold in Alaska, South America, and Canada, the U.S. economy, which held the gold standard at that time, was receiving a large influx of wealth. This led to consumer confidence because if the country was doing so financially well, then logic leads one to believe that the country's businesses will be doing equally well. One way people took advantage of this influx was the stock market. Eventually people started investing more money than they had in the stock market, using loans from lenders. It got to the point where the amount of money being traded on the stock market from lenders and the amount of money sitting in shares exceeded the amount of money in circulation at the time. This basically means the stock market was overinflated with money people didn't actually have. Eventually people would have to sell their stock and pay back their loans. On Black Thursday, too many people sold their stocks and the market crashed, with prices falling to phenomenal levels.