The Wall Street Crash

The 1920s was a time of progression. The world was still scarred by the First World War and the Spanish Flu, which combined had killed over 70 million people. It had become impossible to look at the world in the same way, but the future at least appeared bright.

The USA was thriving. An economic boom had given more people jobs and a better standard of living. The decade saw working class Americans taking an interest in the stock market, but most would only buy stock on margins, meaning they would only pay a small amount and would loan the rest from the bank.

Stocks were overpriced, and an overconfidence swept the nation. This combination would prove to be catastrophic as the market peaked in September 1929.

The thriving economic situation within the USA made people unafraid of debt. It was so easy to buy on credit and with the stability of the market, it felt as though things would always be rosy. When the market crashed, it hit the people who least expected it the hardest.

Stock prices, having been high for so long, began to gradually fall through September and October. On October 18 the fall began. Panic set in, and on October 24, Black Thursday, a record 12,894,650 shares were traded. Investment companies and leading bankers attempted to stabilize the market by buying up great blocks of stock, producing a moderate rally on Friday.

On Monday, however, a second collapse occurred and the market went into free fall. Black Monday was followed by Black Tuesday (October 29, 1929), in which stock prices collapsed completely and 16,410,030 shares were traded on the New York Stock Exchange in a single day.

Billions of dollars were lost as the crash plummeted millions into destitution. In the days that followed, a panic set in which made the situation so much worse. People fled to the bank in order to get hold of their money, only to find that the bank had lost it in the stock market.

The roaring twenties had produced a fearless attitude with Americans. Some may have thought that the good times would end one day, but perhaps never thought they would see that day.

The role of the Wall Street Crash as a catalyst for the Great Depression, the worst economic period in the industrialised western world, is disputed. It wasn’t the sole reason, but the hangover caused by the collapse of the market would hinder the US economy for years to come. By 1933, over four years after the crash, approximately 15 million people were unemployed and stock shares were worth just 20% of their value in 1929.

It was a long and painful recovery for the USA, with the new deal policies of President Franklin D Roosevelt injecting the first signs of life into the nation’s economy. It would however be the beginning of the Second World War which finally dragged America out of the depression, with the need for munitions and soldiers helping to tackle unemployment.

--

--

--

I am a journalist with an honours degree from Coventry University. I’m a published author and journalist with several years experience

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

How To Make A Wealth Tax Constitutional If the Supreme Court Strikes It Down

MicroSave and MetLife Foundation launch i3 Program in Vietnam to improve low-income people’s…

The Leveraged Loan Market Is Like a Water Balloon Ready to Burst — and Here’s Why You Should Care

Inflation in the Times of Corona

Debt is Always Fractional Reserve

The Challenge of Impact Investing

Buffet Inspires G2’s Direct Investments

Why Green Capitalism Can Never Be Green Enough

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Patrick Hollis

Patrick Hollis

I am a journalist with an honours degree from Coventry University. I’m a published author and journalist with several years experience

More from Medium

HOUSE RENTS AND MONTHLY SALARIES BY STATES IN GERMANY

5 Major Canadian Banks Go Offline For Hours. What’s Happening?

Don’t Bail on Your Bonds

The Return to the Planet of the Apes