Warren Buffett Story PART 4 | The Buffett Family during the Great Depression
Black Thursday, October 24, 1929: The Great Depression arrived!
In those dark times, how did Americans survive? What was the impact on America and the world? What changes did the United States make afterwards?
Let's go back in time to find out.
In the winter of 1929, a wave of bankruptcies like this swept across the United States which was told in the earlier article.
Some wealthy people who had been vacationing on their yachts at sea the week before returned to shore to be told by their banks that they were bankrupt.
Not only the wealthy, but anyone who borrowed money to buy stocks became bankrupt overnight.
Even the banks went bankrupt, and the whole western United States economy was in great depression; this situation also indirectly affected Europe, Japan, and even China at that time. He wrote a report based on his observation that "he saw many people holding bundles of stock and seeking buyers, but their stocks had long since declined by more than half, or even more, and no one dared to take any more stock."
The highest suicide rate in American history occurred in 1930.
Just over night, America was full of poor people because everyone had lost their property. They had to find ways to save money, such as replacing light bulbs with energy-saving ones, sharpening their razors, sewing up their torn clothes, and mending their torn shoes.
When people went out to buy food, they found the streets filled with people who were broke and waiting for relief goods. Even at the bakery, it was full of people, and waiting overnight would only get them a few loaves of stale bread.
Howard Buffett was a stockbroker at the time, and because of the stock market crash, he hid at home and did not dare to face his clients. His wife, Leila, became ill for a long time due to the strain of life and almost died. Buffett was born in an environment where the world was in such a depressed state, with people's desperate eyes everywhere.
All kinds of social problems began to appear. About three million high school students had to drop out of school because of their family's bankruptcy. The country's unemployment population rose to eight million; among these people, some of them could not bear the mental and physical pain at the same time and committed suicide; the rest of the people also became part of the social instability at that time.
The Great Depression lasted for four years, and the crisis spread to other industrialized countries, not only the United States but also the United Kingdom. The number of unemployed is higher because the crisis is different from the previous situation; there is no way to use the bankers to save the market immediately to achieve the desired results.
This stock market crash is enough to make the U.S. stock market experience a short bear market for up to 25 years. It was not until 1954 that the stock index slowly recovered to the level of September 3, 1929.
Americans had 25 years to reflect on the stock market crash's unprecedented devastation. Congress took legislative remedial measures to regulate the U.S. financial market from the basic beginning, regulated the securities market more closely from a legal point of view, and formulated related laws, such as the Securities Act of 1933, the Securities Exchange Act of 1934, the Stock Ownership Act of 1935, the Trust Indenture Act of 1939, the Investment Company Act (including the Investment Advisers Act of 1940), etc.
Through a series of control measures to create a comprehensive and tight management network for the entire U.S. securities market, a solid foundation was laid for the subsequent stock market revival and a whole new set of rules for Warren Buffett to play by in the stock market in the future.
How did the Buffett family survive such dark times?
We'll share more on that in the next article!
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