(1929 ) By mid November, the value of the New York Stock Exchange listings had dropped over 40%, a loss of $26 billion. (1929-1931) At one point in the crash tickers were 68 minutes behind. (1929-1931) An average of about $50,000,000 was wiped out in a minute on the exchange. (1929-1931) A few investors that lost all of their money jumped to their deaths from office buildings. Others gathered in the streets outside the Stock Exchange to learn how much they lost.( Black Thursday ) The Cause There are five proposed reason's why the stock market crashed. On of the reasons was that stocks were overpriced and the crash brought the share prices back to a normal level. Some studies using standard measures of stock value, such as Price/Earning ratios and Price/Dividend ratios, argue that the share prices weren't too high. Another reason is that there was massive frauds and illegal activity. However, evidence revealed that there was probably very little actual insider trading or illegal manipulation. (1929 ) Margin buying is another reason that people believed that the crash happened. Though it is not the main reason, there was very little margin outstanding relative to the value of the market. The new President of the Federal Reserve Board, Adolph Miller, tightened the monetary policy and set out to lower the stock prices since he perceived that speculation led stocks to be overpriced, causing damage to the economy. Also, in the beginning of 1929, the interest rate charged on broker loans rose tremendously. This policy reduced the amount of broker loans that originated from banks and lowered the liquidity of non-financial and other corporations that financed brokers and dealers. Lastly, many public officials commented that the stock price was too high. Herbert Hoover publicly stated that stocks were overvalued and that speculation hurt the economy. Hoover's statement suggested to the public the lengths he was willing to go to control the stock market.
