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Word Count: 587
The Crash of 1929 Although the Prohibition controversy was absorbing public interest in the first year of the Hoover administration became diverted by an event that shook the very economic foundations of the nation namely the stock market panic of 1929 The United States had enjoyed a boom after World War I in which wages were high and production and consumption increased During this period many had developed a tendency to invest savings and earnings in speculative ventures particularly the buying of stocks on margin-putting up as little as 3 percent of a stocks price in cash and borrowing the remainder from the broker The booming demand for stocks and the prosperous state of the nation as a whole led to a general rise in the prices of securities which in turn led to increased investments in them The rise in stock prices reached its height in the so-called Hoover bull market during the first six months of the Hoover administration In this period individuals invested billions of dollars in the stock market obtaining the money for such investments by borrowing from banks mortgaging homes and selling sound government securities such as Liberty Bonds In August 1929 stockbrokers were carrying on margin for their clients approximately 300 million shares of stock By October 1929 the feverish wave of buying had exhausted itself and gave way to an equally feverish wave of selling Prices dropped precipitously and thousands of people lost all they had invested This collapse frequently meant complete financial ruin On October 29 the New York Stock Exchange the largest in the world had its worst day of panic selling By the end of the year declines in stock values reached 15 billion The Great Depression The stock market panic preceded an economic depression that not only spread over the United States but in the early 1930s became worldwide In the United States despite the optimistic statements of President Hoover
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