170: The Crash of 1929 & Meeting President Herbert Hoover
History That Doesn't Suck
Deep Dive
Why did the stock market crash of 1929 happen?
The crash was fueled by overinvestment in overvalued tech and utility stocks, unethical investment trusts, and widespread use of margin accounts. The Federal Reserve's inability to effectively regulate these factors contributed to the market's instability.
How did Herbert Hoover become known as the 'Great Humanitarian'?
Hoover earned this title through his extensive humanitarian work during and after World War I, including managing relief efforts in Belgium and leading the U.S. Food Administration, where he successfully implemented food conservation programs.
What role did the Federal Reserve play in the lead-up to the 1929 crash?
The Federal Reserve struggled with internal disagreements on how to address the speculative bubble. While they raised the discount rate, their efforts to curb speculation were inconsistent and ultimately ineffective in preventing the crash.
How did the Buttonwood Agreement impact the New York Stock Exchange?
The Buttonwood Agreement professionalized securities trading in New York by ending auctions and introducing fixed commission rates, leading to the establishment of the New York Stock Exchange.
What was the significance of Richard Whitney's actions during the 1929 crash?
Richard Whitney's purchase of stocks using a pooled fund from major banks helped stabilize the market on Black Thursday, temporarily halting the panic selling and restoring some confidence.
Why did the Massachusetts Public Utilities Commission deny the stock split request by Edison Electric Illuminating Company?
The Commission's chairman, Henry Atwell, believed the stock was overvalued due to speculation and that the split would mislead small investors, leading to potential financial harm.
How did the 1929 stock market crash impact individual investors like George Mahales?
George Mahales, a small-time investor, lost his life savings and had to sell his restaurant to cover margin calls, illustrating the personal devastation the crash caused for many average Americans.
- Stock prices plunge unexpectedly on October 24, 1929 (Black Thursday).
- The market crashes on October 29, 1929 (Black Tuesday).
- Bankers pool resources to temporarily stabilize the market, but the crash is inevitable.
Shownotes Transcript