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Well, you might think that those crashes could be car crashes or plane crashes or train crashes. You might also think that if nation could have lost billions of dollars and lots of lives, those could be car or plane or train crashes. But as you thought, those were not car or plane or train crashes 75 and 20 years ago. The reasons were different than what you are thinking. The main reasons to lost billions of dollars, lost precious lives and lots of damages to the nation were the Stock Market Crashes. On Thursday October 24, 1929 and on Monday October 19, 1987, there was a crash of stock prices on New York stock Exchange. It was a huge crash of stock prices in a single day. Billions of dollars and a number of precious lives were lost. But what we particularly think about Stock Crashes and how does it affect to common lives. The stock markets crashes and its affects are interrelated. The term Stock crash came in to English Dictionary around 200 years ago. There was a first stock market crash in the history of economy and in early industrialization era, in the year 1878. It occurred in Wall Street and followed by huge opposition of stock system. But, if we define stock crash, it is a devaluation of stocks or shares of different industries since their price on the vary day. The devaluation of stocks may goes down from 1% to 50 %. It depends on the time and the parameters. And also we need to know what is the stock market. The Stock Market is a place of commerce where people can come and buy or sell parts of companies called "stocks" or "shares". For example, if you wanted to buy 30 shares of "Hevini Enterprise’s stock for $5.00 a share, you spend $150.00. Then you sell 20 shares to your friend Joe at $20.00 a share. That means that you make a net income of $250. This is the reason that the Stock Market is so popular with investors. This is how investors make their money. A stock is a certificate of a share of ownership in a business corporation, entitling it's owner to dividends, that is, a share of the profits, and to a vote in that firm. But, there are a number of parameters, which can trigger the stock crashes, such as illegal activities, government policies, trade and budget deficits. The main affects of the stock crashes were the general investors, who have faith in their stock markets, economical system and financial solidarity; and the growing economy, which tried to be stabilized after bloodiest world war I. The 1920s began with the closing of the bloodiest war the world had ever witnessed. The nation was tired and in trouble, adjusting to peacetime living (Analytical Essay on the 1920’s, 2000). In the later half of 1920s things were really rocking in the US and around the world. The rapid increase in industrialization was refueling growth in the economy and technology improvements had the leading economists believing that the upraise would continue. During this period, wages increased along with consumer spending and stock prices began to rise as well. Billions of dollars were invested in the stock market as people began speculating on the rising stock prices and buying of margins. (Analytical Essay on the 1920’s, 2000). So, you might think, how would these stock markets crashes have occurred? Since massive fraud, illegal activities, programmed trading could be some of the main causes of stock crashes. None of leading economic analysts has figured out yet after 75 years. But, number of analysts tried, why and how it happened. They figured out that in past and in future there are number of parameters can trigger or could have triggered stock markets crashes, such as: Many people believe that overprice stock could or can be the one of the main causes. The crash brings the share prices back to normal level (The 1929 stock market crash, 2000). Also, A number of people believe that massive fraud and illegal activities might be the main villain of stock crashes. But things proved that very little actual insider trading and illegal activities could cause the crash (The 1929 stock market crash, 2000). Whenever the reserve bank tightened the Monetary policies and let out to lower the stock prices since it perceived that speculation lead stocks to be overprice causing damage to the economy (The 1987 stock market crash, 2000). Now you might think that what is Monetary Policies. Although, Monetary policy is a central bank's actions to influence the availability and cost of money and credit, as means of helping to promote national economic goals. But, Many economists believe that the use of Computer trading (programmed trading) by large investing corporations might be the one cause. In programmed trading, computers are programmed to automatically order large stock trades when certain market prevailed (The 1987 stock market crash, 2000). And, Numbers of analysts agree that Overprice stock can trigger crash and can damage economy (The 1929 stock market crash, 2000). One belief is that large trade and budget deficits might lead investors into thinking that those could cause a fall of stocks (The 1987 stock market crash, 2000). And Buying on margin, many people figured out that the buying on margin can or could be the villain. The investors buy stocks on a small percentage of investments and loan other part of investments from the banks. If the stock prices fall down, investor could not repay its loan back to banks, so the stockbrokers sell those stocks at random prices. But, if the stock prices go up, the investors gain the profit. In the summer of 1929, stockbrokers had lent out over $6,000,000.00 in margin loans (The 1929 stock market crash, 2000). . On Thursday October 24, 1929, the prices of stocks began to fall out. As prices dropped precipitously as more and more investors tried to sell their holdings. By the end of the day, New York Stock Exchange had lost more than four billion dollars. (Babson, 1929) By the following Monday, the realization of what had happened began to sink in, and full-blown panic ensued. Thousands of investors, many of them ordinary working people, not serious investors were financially ruined. By the end of the year, stock values had dropped down by fifteen billion dollars (Babson, 1929). But the largest stock market crash in Wall Street and world financial history occurred on Monday October 19, 1987. When the Dow Jones Industrial Average fell from 2246 to 1738, plunged 508.32 points, loosing 22.6% of its value. From the close of trading on Tuesday October 13, to the close of trading on Monday October 19, the Dow fell by almost one third, indicating a loss of all outstanding US stocks of approximately One trillion Dollars (The 1987 Stock market crash, Key event: black Monday Crash of 1987 Rocks Stock market; 2000). Well, when stock market crashes, it does affect number of aspects of common lives as well the nation. Everyone could be in some way affected by the crash. Farmers, as well as the textile, mining, railroad, and lumber industries all may lose major income. Wages drop down and many workers might be laid off. U.S. Imports and Exports all decline because banks are low on money and can't afford anything. Foreign countries don't have enough money to buy U.S. Crops. When the farmers started to make less money, they started to produce more crops and that saturated the food market. All in all, many people can do many wrong things and as people backtracked to correct what have gone wrong, others get trample in the rush. So about common lives. Severe damages to precious lives. People have committed suicide. The unemployment rate had gone up. In 1929, following the nightmare crash, there was widespread hunger all around. People had lost their savings and jobs. Poverty level has gone up due to unemployment. People started looting each other to feed their family or to get food for them selves. Crime rate has tripled then the before. People jumped from buildings to death. That was the Great Depression. World wide economic crisis has been raised following the New York Stock market crash in 1929. The stock market crash symbolizes the superficiality and greed of industrialization. It is caused by the thousands of people and it does affect millions of people. The crash teaches people to stop taking great risks and living carefree lives and be more responsible. The crashes break the nerves of economy and the nation. Following crash nation may lose all its economical growth and financial stability. So, Stock market crash is as danger as one might not think. Crash can be deadly like other disaster. It damages economy, thousands of lives and the it does affect psychologically. Bibliography: Works Cited “Analytical essay on the 1920’s” , January 21, 2000. Babson, John.” Stock Prices break on a dark prophecy”. New York Times. Friday September 6, 1929, page1, Col. 7. “Key events: Black Monday crash of 1987 Rocks Stock Markets” http://www.facts.com/cd/v00066.htm >, January 14, 2000. “The 1987 Stock Market crash”, , January 14, 2000. “ The 1929 Stock Market crash”. January 14, 2000. Word Count: 1555
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