Where did the money go when the stock market crashed in 1929?

Answer 1

The money that was tied up in the Stock Market was the paper value of the stocks that were bought and sold. There was no regulation of the Stock Exchange at the time of the Great Depression so stocks and companies listed on the Exchange were often over-valued by the owners of the companies. As people tended to buy one stock over another, the value of that stock increased (on paper) while the value of the little purchased stock declined (on paper). When stock brokers started to call in the money they were owed by investors who had purchased stocks on time (called margin buying), the investors would try and sell their stocks in order to pay off the broker. Since many of the other investors were doing the same thing, the value of the stock declined and people found it next to impossible to sell their stock. When the Stock Market collapsed, there was no real money at the Stock Market Exchange. The money was in the value of the stock of the company being listed (bought and sold) on the Exchange. When the bottom fell out of the Market, the people who had invested money in the Market and could not sell it, never got it back. So the simple answer is that the money just dissappeared!! Those stocks that survived the crash, and those investors who held on to the stocks they owned, may have been able to sell those stocks later on as the Stock Exchange was allowed to open under regulation by the government. If I company did not survive the crash and was never listed on the Exchange again, those investors never got any money back.