The 1929 crash of stock market was a result of too many people over-extending themselves in the stock market.
Stocks quadrupled in price during the 1920’s. The Dow Jones rocketed from 60 to 400! People saw stocks as a sure thing, and borrow heavily to invest more in the stock market. People were buying stocks on margin. Most people didn’t even bother studying the fundamentals of the companies they invested in. Thousands of fraudulent companies were formed to ripoff naive investors. Even then banks they borrowed from, invested their customers savings in the stock market.
Then the stock prices began to fall hitting rock bottom in 1932-1933. The stock market lost 80% of it’s value. People stopped buying stocks, and companies could no longer grow from lack of new investment capital. People couldn’t afford to repay the banks as the stocks they borrowed to invest in were now worthless. Customers who had their savings in the banks could not get their noeny out, because the banks had lost their money in the stock market, and could not collect loans. Banks began to fail. Businesses could not borrow money for day to day operations, began to fail.
Eventually the public began to regain confidence, and the economy slowly recovered over the next 10 years.
Dues changes in banking the introduction of the FDIC, changes in the stock market operations, etc, it is unlikely that we will ever suffer another crash quite as bad as the stock market crash of 1929. We have had crashes since 1929, but none have been as bad, or nearly as long lasting as the 1929 crash of the stock market.