Wall Street Crash (October 1929)

The Wall Street Crash was the U.S. Stock Market crash of
October 29, 1929, which precipitated a world-wide collapse of
share values and triggered the Great Depression 10 years of
economic slump with catastrophic levels of unemployment across
all the industrialised countries apart from the Soviet Union.

After the end of the First World War, the world economy was
boosted by a period of reconstruction. In the early- to mid-1920s, a
series of defeats were inflicted on the workers movement which
had been engaged in revolutionary struggles in the wake of the War
and the Russian Revolution. These events created conditions for an
economic boom which became known as the Roaring Twenties.
The value of shares on the US stock market rapidly climbed,
reaching a peak at the end of August 1929. Prices began to decline
in September and early October, while speculation continued, but
came to an abrupt end on October 18, when the Stock Market
began to fall precipitately. The first day of real panic, October 24,
is known as Black Thursday a record 12,894,650 shares were
traded. Major banks and investment companies bought up stocks in
an attempt to hold up prices and stem the panic, but the panic
began again on Black Monday, and on Black Tuesday,
October 29, 16,000,000 shares were sold, and prices on the stock
market collapsed completely.

Bankruptcies and skyrocketing unemployment spread from the

US to every country in the world, except the USSR, where
production continued to expand after the devastation of the Wars
of Intervention (1918-1922). The Soviet Union was relatively
unaffected by the Crash, firstly because it was a planned economy
and not dependent on speculation, and secondly because, in any
case, it had been more or less isolated from the world economy.
The Great Depression lasted into the late 1930s with 14 million
unemployed in the US alone, most with little means of support
until Roosevelts New Deal was brought in.
 (8) Selected share prices from the Wall Street
Journal (1928)

Company 3-3-1928 3-9-1928 3-9-1929 13-11-1929

$ $ $ $

Montgomery Ward 132 466 137 49

New York Central 160 256 256 160

Union Carbide & Carbon 145 413 137 59

American Telephone &

77 181 304 197
Telegraph

Anaconda Copper 54 162 131 70

Westinghouse 91 313 289 102

Electric Bond 89 203 186 50

The Wall Street Crash and Depression

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In 1928 the new Republican president Herbert Hoover confidently stated,
'We in America today are nearer to the final triumph over poverty than ever
before in the history of any land.' Within a year, all the confidence had
ended and America was plunged into the Depression.

Wall Street Crash

When the Wall Street stock market crashed in October 1929, the world economy
was plunged into the Great Depression. By the winter of 1932, America was in the
depths of the greatest economic depression in its history.
The number of unemployed people reached upwards of 13 million. Many people lived
in primitive conditions close to famine. One New York family moved into a cave in
Central Park. In St Louis, more than 1,000 people lived in shacks made from scrap
metal and boxes. There were many similar Hoovervilles all over America. Between
1 and 2 million people travelled the country desperately looking for work. Signs
saying 'No Men Wanted' were displayed all over the country.
Many children were deserted and left homeless during the Depression
By the time of the election in November 1932, Hoover's popularity had reached rock
bottom. It was not even safe for him to go onto the streets to campaign. After his
heavy defeat, Hoover told his friends, "we are at the end of our string... there is
nothing more we can do". The American economy did not fully recover until the USA
entered the Second World War in December 1941.

Causes of the Depression

1. As early as 1926, there were signs that the boom was under threat - this was
seen in the collapse of land prices in Florida.
2. Eventually, there were too many goods being made and not enough people
to buy them.
3. Farmers had produced too much food in the 1920s, so prices for their
produce became steadily lower.
4. There were too many small banks - these banks did not have enough funds
to cope with the sudden rush to take out savings, which happened in the autumn
of 1929.
5. Too much speculation on the stock market - the middle class had a lot to
lose and they had spent a lot on what amounted to pieces of paper.
6. The Wall Street Crash of October 1929 was a massive psychological blow.
7. America had lent huge sums of money to European countries. When the
stock market collapsed, they suddenly recalled those loans. This had a
devastating impact on the European economy.
8. The collapse of European banks caused a general world financial crisis.
Effects of the Depression
1. Unemployment - 13 million people were out of work.

2. Industrial production dropped by 45 per cent between 1929 and 1932.

3. House-building fell by 80 per cent between 1929 and 1932.
4. The entire American banking system reached the brink of collapse.
5. From 1929 to 1932, 5,000 banks went out of business.
6. Although many people went hungry, the number of recorded deaths from
starvation during the Depression was 110, although many other illnesses and
deaths were probably related to a lack of nutrition.