<P> The Wall Street Crash had a major impact on the U.S. and world economy, and it has been the source of intense academic debate--historical, economic, and political--from its aftermath until the present day . Some people believed that abuses by utility holding companies contributed to the Wall Street Crash of 1929 and the Depression that followed . Many people blamed the crash on commercial banks that were too eager to put deposits at risk on the stock market . </P> <P> In 1930, 1,352 banks held more than $853 million in deposits; in 1931, one year later, 2,294 banks went down with nearly $1.7 billion in deposits . Many businesses failed (28,285 failures and a daily rate of 133 in 1931). </P> <P> The 1929 crash brought the Roaring Twenties to a shuddering halt . As tentatively expressed by economic historian Charles P. Kindleberger, in 1929, there was no lender of last resort effectively present, which, if it had existed and were properly exercised, would have been key in shortening the business slowdown (s) that normally follows financial crises . The crash marked the beginning of widespread and long - lasting consequences for the United States . Historians still debate the question: did the 1929 Crash spark The Great Depression, or did it merely coincide with the bursting of a loose credit - inspired economic bubble? Only 16% of American households were invested in the stock market within the United States during the period leading up to the depression, suggesting that the crash carried somewhat less of a weight in causing the depression . </P> <P> However, the psychological effects of the crash reverberated across the nation as businesses became aware of the difficulties in securing capital market investments for new projects and expansions . Business uncertainty naturally affects job security for employees, and as the American worker (the consumer) faced uncertainty with regards to income, naturally the propensity to consume declined . The decline in stock prices caused bankruptcies and severe macroeconomic difficulties including contraction of credit, business closures, firing of workers, bank failures, decline of the money supply, and other economically depressing events . </P>

What caused the stock market to crash in the 1920s