Although there have been several in American history, I infer you're referring to the crash in October of 1929. Much of the direct cause can be attributed to over speculation -- stocks are subject to the same economic law of supply and demand as any other commodity -- in the 1920's, the US surpassed Europe as the primary economic force in the world, primarily because the economies of Europe imploded during and after World War I. As the only substantial industrial power left, the US saw its economy expand, leading to the phrase that defines the era as "The Roaring Twenties." With increased wealth, many more people began to invest in stocks, driving up the price. Concurrently, unscrupulous investors, like JP Kennedy (patriarch of the Kennedy Clan,) made millions by "Stock Pooling," where a group would pool their money to buy stock, drive up the price, and once enough other investors not part of the pool had bought in would sell shares all at once. This guaranteed a huge return to the original investors at the expense of the later ones. Unfortunately, Kennedy and others began to move larger and larger blocks of stock in and out of the market, and as wider and wider price swings of high and low for a given stock occurred many investors began to stop investing and liquidate stocks, causing prices to fall, then tumble, then crash. Ironically, Mr. Kennedy was made the first chairmen of the SEC (Securites and Exchange Commission) under President Roosevelt (FDR) to curb the abuses he himself had instigated! The president offered the job to Kennedy and stated, "It takes a thief to catch a thief."
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