Wall Street Crash of 1929
It happened in the New York Stock Exchange on Tuesday October 29, 1929, now known as Black Tuesday. The crash started the Great Depression and stock prices did not reach the same level until late 1954.
The crash signalled the beginning of the 10-year Great Depression that affected all Western industrialized countries. It did not end in the United States until the start of American mobilization for World War II at the end of 1941. More than 13 million people lost their jobs after the banks crashed.
Causes[change | change source]
"At the turn of the 20th century stock market speculation was restricted to professionals, but the 1920s saw millions of 'ordinary Americans' investing in the New York Stock Exchange. By August 1929, brokers had lent small investors more than two-thirds of the face value of the stocks they were buying on margin – more than $8.5bn was out on loan".
The amount of money out on loan was more than the entire amount of currency circulating in the U.S.A at the time. When a stock price declined below the amount of borrowed money, the owner had to sell to pay the debt. This caused prices to decline more. Years later, regulations limited the use of debt in this way.
References[change | change source]
- Black Tuesday Black Tuesday -America's Story
- Bone, James. "The beginner's guide to stock markets". The Times. London. Archived from the original on May 25, 2010. Retrieved January 29, 2012.
The most savage bear market of all time was the Wall Street Crash of 1929–1932, in which share prices fell by 89 per cent.
- "Stock market crash of 1929". Encyclopædia Britannica. Retrieved January 29, 2012.
- Lambert, Richard (18 July 2008). "Crashes, Bangs & Wallops". Financial Times. Retrieved 30 September 2008.
- Facing the facts: an economic diagnosis. Retrieved 2008-09-30.