Wall Street Crash Of 1929 And Great Depression

Wall Street

Crash

of

1929

and

Great Depression

Index:

1.Introduction page 3

2.The fall of the New York Stock Exchange page 4

3.The Great Depression page 8

4.Conclusion page 13

5.Annex page 13

6.Bibliographical References page 15

1.Introduction:

1.1.Wall Street Crash of 1929:

The Wall Street Crash of 1929,also known as the “Great Crash” or the “Stock Market Crash of 1929”, was the most devastating stock market crash in the history of the United States, taking into consideration the full extent and longevity of its fallout. Three phrases (Black Thursday, Black Monday, and Black Tuesday) are commonly used to describe this collapse of stock values. All three are appropriate, for the crash was not a one-day affair.

At the time of the unbelievable crash, New York City had become a major metropolis, and its Wall Street district was one of the world's leading financial centers. The New York Stock Exchange (NYSE) was the largest stock market in the world. Shortly before the crash, Irving Fisher famously proclaimed, “Stock prices have reached what looks like a permanently high plateau.” The optimism and financial gains of the great bull market were shattered on Black Thursday, when share prices on the NYSE collapsed. Stock prices fell on that day and they continued to fall, at an unprecedented rate, for a full month.

1.2.Great Depression:

The Great Depression was a worldwide economic downturn starting in most places in 1929 and ending at different times in the 1930s or early 1940s for different countries. It was the largest and most important economic depression in the 20th century, and is used in the 21st century as an example of how far the world's economy can fall. The Great Depression originated in the United States; historians most often use as a starting date the stock market crash on October 29, 1929, known as Black Tuesday. The Great Depression ended at different times in different countries; for subsequent history see Home front during World War II. The majority of countries set up relief programs, and most underwent some sort of political upheaval, pushing them to the left or right. In some states, the desperate citizens turned toward nationalist demagogues (the most infamous being Adolf Hitler) setting the stage for World War II in 1939.

1.The fall of the New York Stock Exchange:

2.1..Because of the crisis:

As prosperity increased, employers sought new business to invest their profits. Lent money to Germany and other countries and installed their industries abroad. Also invested in machinery to increased their productions. The purchase of shares in the stock market was becoming the most profitable one. Many times, to buy shares, the stock brokers to banks calling. Because the profits of the shares could reach a 50% annual interest payable on bank loans was 12%, the benefits derived were enormous.

In 1928, did provide some signs that the economy had a problem. The receipts of the population had not risen as much as consumption continued to growing. The warehouses were full of goods that couldn’t be sold, and many factories began to laying of their workers. However, in the stock exchange continued the party. The prices at which shares were sold didn’t reflect the actual economic situation of the companies. While the growth of many companies were stopped, their actions were still going up because there was a large demand from speculators. Nobody could realize the gravity of the situation. When in October 1929, the New York Stock Exchange broke, the crisis was inevitable and was extended to the banking system, the industry, the U.S. trade and agriculture. Its consequences are also felt throughout the world and lasted until World War II.

2.2.Black Thursday on Wall Street: The outbreak of the crisis

Stock Exchange had growing since 1924, without apparent reason than confidence in the economic boom, while the credits linked to securities grew. It had become a great financial bubble that could burst at any time.

In March 1929 the dramatically increases continued, however, began to circulate some rumours that the Federal Reserve was preparing measures that could alleviate potential recessions and economic downturns. The nerves began to flow through the park. Great magnates began to escape, like Joe Kennedy. The first scandal occurred on March 25 of 1929. The index fell 9.5 points. On Tuesday 26, nerves were unleashed and sold as shares as they could. Interests were soared in one day up to 20%. However, Charles Mitchell, used the money from the Federal Reserve Bank to cover the sales and that slowed the dropp and he recovered the confidence. After that, the second day of panic, the stock market fell 15 points.

The shock was quickly forgotten and soon the stock market began to rise again with lot of power. The stock market rose over 118 points the first 8 months. The credits were already soared to 7000 million. In October 1929 the stock market seemed tired, and Friday 18 index fell 8 points. It wasn’t more than a fall before continue rise. However, people continued two days of fall to buy "cheaper".

On Wednesday 23, the stock market suffered a big blow to lose in one session 31 points (almost 7%). That day was only an example of what would happen the day after. The fateful and reminded “Black Thursday of Wall Street”. Suddenly a lot of paper went out that prices started to fall in an uncontrolled way. Stock Exchange entered into free fall, brokers were asking for guarantees desperate for those titles that were purchased on credit, but obviously no one could help them. The same brokers, to cover that losses, selling more shares, causing new decreases. Several times happened this during the session, when even worked in a voice cry in circles. The session was a authentic pot of crickets where the nerves appeared for the minimum contretemps.

A lot of rumours of suicide began to circulate and people on the street, curious,

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