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The Wall Street Crash of 1929

The Wall Street Crash of 1929 marked the beginning of the Great Depression in the United States. In the late 1920s, stock prices rose rapidly due to widespread speculation and easy credit. When some companies reported disappointing earnings in October 1929, investors began selling off their shares, triggering panic across Wall Street. On October 29th, known as Black Tuesday, the stock market collapsed as share prices fell dramatically. The crash wiped out many individual and institutional investors and devastated the American economy, leading to widespread business failures, soaring unemployment, and plummeting consumer demand over the next several years.

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301 views11 pages

The Wall Street Crash of 1929

The Wall Street Crash of 1929 marked the beginning of the Great Depression in the United States. In the late 1920s, stock prices rose rapidly due to widespread speculation and easy credit. When some companies reported disappointing earnings in October 1929, investors began selling off their shares, triggering panic across Wall Street. On October 29th, known as Black Tuesday, the stock market collapsed as share prices fell dramatically. The crash wiped out many individual and institutional investors and devastated the American economy, leading to widespread business failures, soaring unemployment, and plummeting consumer demand over the next several years.

Uploaded by

Ramona Alina
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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The Wall Street Crash of 1929

The Roaring Twenties was a decade of exces and entertainment that most Americans believed would never end. But on Tuesday, October 29, 1929, everything changed. On Wall Street, the financial heart of the United States, stock prices came crashing down. The collapse of the stock market caused thousands of investors to lose their fortunes and put many small companies out of business. The crash also singnaled the beginning of one of the worst economic crises in U.S. history: The Great Depression.

What caused Black Tuesday?

In the 1920s, there was a rapid growth in bank credit and loans. Encouraged by the strength of the economy people felt the stock market was a one way bet. Some consumers borrowed to buy shares. Firms took out more loans for expansion. Because people became highly indebted, it meant they became more susceptible to a change in confidence. When that change of confidence came in 1929, those who had borrowed were particularly exposed and joined the rush to sell shares and try and redeem their debts. A lot of the Stock Market crash can be blamed on over exuberance and false expectations. In the years leading up to 1929, the stock market offered the potential for making huge gains in wealth. It was the new gold rush. People bought shares with the expectations of making more money. As share prices rose, people started to borrow money to invest in the stock market. The market got caught up in a speculative bubble. Shares kept rising and people felt they would continue to do so. The problem was that stock prices became divorced from the real potential earnings of the share prices.

In March 1929, the stock market saw its first major reverse, but this mini-panic was overcome leading to a strong rebound in the summer of 1929. By October 1929, shares were grossly overvalued. When some companies posted disappointing results on October 24 (Black Thursday), some investors started to feel this would be a good time to cash in on their profits; share prices began to fall and panic selling caused prices to fall sharply. Financiers, such as JP Morgan tried to restore confidence by buying shares to prop up prices. But, this failed to alter the rapid change in market sentiment. On October 29(Black Tuesday) share prices fell by $40 billion in a single day. By 1930 the value of shares had fallen by 90%

In total, $25 billion some $319 billion in today's dollars was lost in the 1929 crash. Stocks continued to fall over subsequent weeks, finally bottoming out on November 13, 1929. The market recovered for a few months and then slid again, gliding swiftly and steadily with the rest of the country into the Great Depression. Companies incurred huge layoffs, unemployment skyrocketed, wages plummeted and the economy went into a tailspin. While World War II helped pull the country out of a Depression by the early 1940s, the stock market wouldn't recover to its pre-crash numbers until 1954.

Fred Bell was a wealthy businessman but was forced to sell apples after the Wall Street Crash.

This is a image of workers waiting outside of their abandoned factory that has been closed due to the Great Depression.

Bibliography
Wall Street: A Cultural History, Steve Fraser http://econimicshelp.org http://www.time.com/time/nation/article/0,8599, 1854569,00.html

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