<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> <P> The resultant rise of mass unemployment is seen as a result of the crash, although the crash is by no means the sole event that contributed to the depression . The Wall Street Crash is usually seen as having the greatest impact on the events that followed and therefore is widely regarded as signaling the downward economic slide that initiated the Great Depression . True or not, the consequences were dire for almost everybody . Most academic experts agree on one aspect of the crash: It wiped out billions of dollars of wealth in one day, and this immediately depressed consumer buying . </P> <P> The failure set off a worldwide run on US gold deposits (i.e. the dollar), and forced the Federal Reserve to raise interest rates into the slump . Some 4,000 banks and other lenders ultimately failed . Also, the uptick rule, which allowed short selling only when the last tick in a stock's price was positive, was implemented after the 1929 market crash to prevent short sellers from driving the price of a stock down in a bear raid . </P> <P> The stock market crash of October 1929 led directly to the Great Depression in Europe . When stocks plummeted on the New York Stock Exchange, the world noticed immediately . Although financial leaders in the United Kingdom, as in the United States, vastly underestimated the extent of the crisis that would ensue, it soon became clear that the world's economies were more interconnected than ever . The effects of the disruption to the global system of financing, trade, and production and the subsequent meltdown of the American economy were soon felt throughout Europe . During 1930 and 1931, in particular, unemployed workers went on strike, demonstrated in public, and otherwise took direct action to call public attention to their plight . Protests often focused on the so - called Means Test, which the government had instituted in 1931 as a way to limit the amount of unemployment payments made to individuals and families . For working people, the Means Test seemed an intrusive and insensitive way to deal with the chronic and relentless deprivation caused by the economic crisis . The strikes were met forcefully, with police breaking up protests, arresting demonstrators, and charging them with crimes related to the violation of public order . </P>

Banks in the stock market crash of 1929