The US stock market involves not just individual investors but major businesses as well. It is therefore not surprising that when the stock prices dropped so quickly on the day of October 24, 1929, the financial community experienced an upheaval. Combined efforts from major businesses, banks and investors to thwart the impending crisis did little. On Black Tuesday, October 29, 1929, the US stock market crashed completely. This demolished the economy of the country because the businesses that had put in a lot of money in stock market investments lost almost everything. Majority of the investors lost faith in the stocks and immediately sold their shares which further caused considerable decline in the stock market.
The stock market crash of 1929 was soon followed by a period which came to be known as the Great Depression. However, do not be misled by a common misconception that it was the 1929 stock market crash which caused this. The crash did contribute to the Depression, but there were other factors which caused it as well.
Factories, manufacturing companies and other producers such as farmers produced a great supply of goods even when the demand did not necessitate it. These caused price declines that were futile since only very few could even buy goods after the crash of the stock market. Banks did not follow government rules and regulations and invested the money of their innocent clients. When the stock market crashed, the life savings of countless individuals vanished. As a result, nobody wanted to put their money in banks any longer, added to by the fact that only very few were left with the means to still be able to invest in banks. Over the course of the Depression, hundreds of banks crashed, aggravating the situation as many clients and consumers were left with little or no money at all.
