Wall street crash of 1929 - Revision history

Pankratz at 12:54, 10 December 2015

2015-12-10T12:54:59Z

Pankratz at 11:18, 12 December 2011

2011-12-12T11:18:21Z

← Older revision		Revision as of 11:18, 12 December 2011
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	:Unless that true value “catches up” with the stock price, the price will begin to fall. When a share of stock loses value, some people sell their shares, afraid they will lose everything if they do not get rid of the devalued stock. If too many sell too quickly, panic can set in, with investors believing they won't get back at least what they paid for the share. This is what happened in October 1929. (18)		:Unless that true value “catches up” with the stock price, the price will begin to fall. When a share of stock loses value, some people sell their shares, afraid they will lose everything if they do not get rid of the devalued stock. If too many sell too quickly, panic can set in, with investors believing they won't get back at least what they paid for the share. This is what happened in October 1929. (18)

	The recession was in full swing by mid-October. On ~~24th of~~ October (~~“Black Thursday”~~) the industrial average dropped to previous June's level with many stocks losing the value they had acquired during the last four months. Therefore, many investors started to panic. As a consequence, 12,894,650 shares were traded by brokers on Black Thursday, thereby establishing a new record which by far exceeded the previous one (~~12th~~ March 1928: 3,875,910 shares traded). Due to international trade relations the Canadian, London and other markets were affected by this first selling wave as well with prices falling as never before.		The recession was in full swing by mid-October. On 24 October ("Black Thursday") the industrial average dropped to previous June's level with many stocks losing the value they had acquired during the last four months. Therefore, many investors started to panic. As a consequence, 12,894,650 shares were traded by brokers on Black Thursday, thereby establishing a new record which by far exceeded the previous one (12 March 1928: 3,875,910 shares traded). Due to international trade relations the Canadian, London and other markets were affected by this first selling wave as well with prices falling as never before.

	== ~~„Black Tuesday“~~ ==		== Black Tuesday ==


	The selling frenzy which began on Black Thursday continued and reached a new height on ~~the 29th of~~ October – Black Tuesday. It was the day of the big stockholders and investment trusts selling as much as possible, whereas the small investors had already lost everything the week before. Another record was established: 16,410,030 shares were traded on this day with a total loss in value of approximately 14 billion dollars (the 1929 budget of the U.S. Federal government was around $3 billion); a very drastic change indeed with far-reaching consequences even for the London Stock exchange which dissolved into pandemonium after the second wave of violent selling.		The selling frenzy which began on Black Thursday continued and reached a new height on 29 October – Black Tuesday. It was the day of the big stockholders and investment trusts selling as much as possible, whereas the small investors had already lost everything the week before. Another record was established: 16,410,030 shares were traded on this day with a total loss in value of approximately 14 billion dollars (the 1929 budget of the U.S. Federal government was around $3 billion); a very drastic change indeed with far-reaching consequences even for the London Stock exchange which dissolved into pandemonium after the second wave of violent selling.
	Few contemporaries realized the seriousness of the crash. Those who did noted its uniqueness: “Panics of the past were brought about by something fundamentally wrong with finance or business, crop failures, earthquakes, strained international relations, prohibitive rates for money, inflated inventories and the like. The recent break was due to the position of the market itself” (qtd. in Klein, 219).
			Few contemporaries realized the seriousness of the crash. Those who did noted its uniqueness: “Panics of the past were brought about by something fundamentally wrong with finance or business, crop failures, earthquakes, strained international relations, prohibitive rates for money, inflated inventories and the like. The recent break was due to the position of the market itself” (qtd. in Klein 219).
	Since banks did take a big part in investing money in stocks, their customers began to empty their bank accounts as soon as they had heard about the falling prices and the subsequent selling frenzy at the NYSE. Most were afraid that there would not be any cash for them left if they wanted to withdraw their money. The effect was devastating: many banks went out of business altogether.		Since banks did take a big part in investing money in stocks, their customers began to empty their bank accounts as soon as they had heard about the falling prices and the subsequent selling frenzy at the NYSE. Most were afraid that there would not be any cash for them left if they wanted to withdraw their money. The effect was devastating: many banks went out of business altogether.

	== Repercussions ==		== Repercussions ==

	Notwithstanding the seriousness of the crisis, the ''Times'' published an article saying: “the longer result of it [i.e. crash] will be restoration of the community's mental health and vision” (qtd. in Klein, 231). However, the Wall Street Crash of 1929 was a heavy blow the U.S. credit system that had played an active part in supporting the country's economic development. Along with further economic decline came rising unemployment rates (up to 25%) and the cutting of wages (up to 50%). Since so many ordinary families had spent all their savings and all their borrowed money on stock speculation, they had no means of paying rent or feeding themselves once unemployment struck. Especially the middle class was affected. Homelessness and disillusionment were the consequence. In contrast to the ''Times'', some economists like Alexander Noyes immediately recognized the danger of the crash saying: "A Stock Exchange panic foreshadows business depression, unemployment and hard times” (qtd. in Klein, 234). As time went by and the Great Depression began to take shape, Noyes' notion prevailed.		Notwithstanding the seriousness of the crisis, the ''Times'' published an article saying: “the longer result of it [i.e. crash] will be restoration of the community's mental health and vision” (qtd. in Klein 231). However, the Wall Street Crash of 1929 was a heavy blow to the U.S. credit system that had played an active part in supporting the country's economic development. Along with further economic decline came rising unemployment rates (up to 25%) and the cutting of wages (up to 50%). Since so many ordinary families had spent all their savings and all their borrowed money on stock speculation, they had no means of paying the rent or feeding themselves once unemployment struck. Especially the middle class was affected. Homelessness and disillusionment were the consequence. In contrast to the ''Times'', some economists like Alexander Noyes immediately recognized the danger of the crash saying: "A Stock Exchange panic foreshadows business depression, unemployment and hard times” (qtd. in Klein 234). As time went by and the Great Depression began to take shape, Noyes's notion prevailed.

Pankratz at 11:14, 12 December 2011

2011-12-12T11:14:08Z

← Older revision		Revision as of 11:14, 12 December 2011
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	~~The 29th of~~ October 1929, often referred to as ~~“Black Tuesday”~~, was the day of the ~~Great Crash~~ of the New York Stock Exchange (NYSE). It was one of the most serious stock market crashes in the history of the USA and is seen by many experts as the beginning of a severe world-wide economic depression which came to be known as the ~~“Great Depression”~~ that affected all Western ~~industrialized~~ countries.		29 October 1929, often referred to as "Black Tuesday", was the day of the great crash of the New York Stock Exchange (NYSE). It was one of the most serious stock market crashes in the history of the USA and is seen by many experts as the beginning of a severe world-wide economic depression which came to be known as the Great Depression that affected all Western industrialised countries.


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	== The Western World Before the Crash ==		== The Western World Before the Crash ==

	The Great Crash of 1929 marked the end of the so-called carefree ~~„Roaring Twenties“~~, a time of relative prosperity and economic well-being. The atrocities of World War I were a thing of the past and the future seemed promising. The production of luxury goods reached a new peak as more and more people started buying ~~“must~~-~~have”~~ items such as refrigerators, radios and cars ~~not by cash but~~ on credit. It was due to a change in the cultural mind-set that the traditional value of ~~canniness~~ gave way to this new and ~~“easy~~ way to ~~buy”~~. Banks ~~on the other hand~~ encouraged this trend and were ~~now~~ keen to lend money to all kinds of people, whether it be a man of business or a mere blue-collar worker. By 1929, around 15 percent of all purchases were bought on credit. Furthermore, borrowed money was progressively used to buy stocks, all of which had increased in value throughout the 1920s. As such they were seen as a sure way to earn money the easy way: buy stocks on the stock market when the prices are low and sell them to others when the prices have gone up. Consequently, using borrowed money to buy stocks – also known as buying on margin – became a wide-spread practice for many ~~common~~ Americans. But in the end it were the Banks themselves which invested substantial amounts of money in the stock market, e.g. in companies such as General Motors, DuPont and RCA (Radio Corporation of America).		The Great Crash of 1929 marked the end of the so-called carefree Roaring Twenties, a time of relative prosperity and economic well-being. The atrocities of [[Great War\|World War I]] were a thing of the past and the future seemed promising. The production of luxury goods reached a new peak as more and more people started buying must-have items such as refrigerators, radios and cars on credit, instead of paying for it in cash. It was due to a change in the cultural mind-set that the traditional value of thriftiness gave way to this new and "easy" way to buy. Banks encouraged this trend and were keen to lend money to all kinds of people, whether it be a man of business or a mere blue-collar worker. By 1929, around 15 percent of all purchases were bought on credit. Furthermore, borrowed money was progressively used to buy stocks, all of which had increased in value throughout the 1920s. As such they were seen as a sure way to earn money the easy way: buy stocks on the stock market when the prices are low and sell them to others when the prices have gone up. Consequently, using borrowed money to buy stocks – also known as buying on margin – became a wide-spread practice for many Americans. But in the end it were the Banks themselves which invested substantial amounts of money in the stock market, e.g. in companies such as General Motors, DuPont and RCA (Radio Corporation of America).

	== Prelude ==		== Prelude ==

	When the ~~“Roaring Twenties”~~ drew to a close signs of an economic crisis became evident: a decline in the textile, coal and farming industries as well as in business in general had already set in. Moreover, unemployment had grown throughout 1928 and construction of new homes – a warning sign for many experts – declined in 1927 and along with it the need for new consumer goods. New production methods and more effective machinery further exacerbated this situation since fewer factory workers were needed to produce the same amount of products: a vicious circle.		When the Roaring Twenties drew to a close signs of an economic crisis became evident: a decline in the textile, coal and farming industries as well as in business in general had already set in. Moreover, unemployment had grown throughout 1928 and construction of new homes – a warning sign for many experts – declined in 1927 and along with it the need for new consumer goods. New production methods and more effective machinery further exacerbated this situation since fewer factory workers were needed to produce the same amount of products: a vicious circle.

	But the worst problem for the stock market by far was over-speculation, i.e. when speculators keep on borrowing money and buying stocks, thereby driving stock prices higher and higher. As a result, prices for many stocks were soon well above what companies were actually worth: the paper value did not match the true value of the company a share represented. Brenda Lange has highlighted the ensuing problem accurately:		But the worst problem for the stock market by far was over-speculation, i.e. when speculators keep on borrowing money and buying stocks, thereby driving stock prices higher and higher. As a result, prices for many stocks were soon well above what companies were actually worth: the paper value did not match the true value of the company a share represented. Brenda Lange has highlighted the ensuing problem accurately:

WikiSysop at 16:39, 8 December 2011

2011-12-08T16:39:55Z

← Older revision		Revision as of 16:39, 8 December 2011
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	But the worst problem for the stock market by far was over-speculation, i.e. when speculators keep on borrowing money and buying stocks, thereby driving stock prices higher and higher. As a result, prices for many stocks were soon well above what companies were actually worth: the paper value did not match the true value of the company a share represented. Brenda Lange has highlighted the ensuing problem accurately:		But the worst problem for the stock market by far was over-speculation, i.e. when speculators keep on borrowing money and buying stocks, thereby driving stock prices higher and higher. As a result, prices for many stocks were soon well above what companies were actually worth: the paper value did not match the true value of the company a share represented. Brenda Lange has highlighted the ensuing problem accurately:

	Unless that true value “catches up” with the stock price, the price will begin to fall. When a share of stock loses value, some people sell their shares, afraid they		:Unless that true value “catches up” with the stock price, the price will begin to fall. When a share of stock loses value, some people sell their shares, afraid they will lose everything if they do not get rid of the devalued stock. If too many sell too quickly, panic can set in, with investors believing they won't get back at least what they paid for the share. This is what happened in October 1929. (18)
	will lose everything if they do not get rid of the devalued stock. If too many sell too quickly, panic can set in, with investors believing they won't get back at
	least what they paid for the share. This is what happened in October 1929 (18)

	The recession was in full swing by mid-October. On 24th of October (“Black Thursday”) the industrial average dropped to previous June's level with many stocks losing the value they had acquired during the last four months. Therefore, many investors started to panic. As a consequence, 12,894,650 shares were traded by brokers on Black Thursday, thereby establishing a new record which by far exceeded the previous one (12th March 1928: 3,875,910 shares traded). Due to international trade relations the Canadian, London and other markets were affected by this first selling wave as well with prices falling as never before.		The recession was in full swing by mid-October. On 24th of October (“Black Thursday”) the industrial average dropped to previous June's level with many stocks losing the value they had acquired during the last four months. Therefore, many investors started to panic. As a consequence, 12,894,650 shares were traded by brokers on Black Thursday, thereby establishing a new record which by far exceeded the previous one (12th March 1928: 3,875,910 shares traded). Due to international trade relations the Canadian, London and other markets were affected by this first selling wave as well with prices falling as never before.

Ivar M. at 20:16, 6 December 2011

2011-12-06T20:16:49Z

← Older revision		Revision as of 20:16, 6 December 2011
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	Klein, Maury. ''Rainbow's End. The Crash of 1929''. Oxford: Oxford University Press, 2001.		Klein, Maury. ''Rainbow's End. The Crash of 1929''. Oxford: Oxford University Press, 2001.

	Lange, ~~Branda~~. ''The Stock Market Crash of 1929. The End of Prosperity''. New York: Chelsea House Publishing, 2007.		Lange, Brenda. ''The Stock Market Crash of 1929. The End of Prosperity''. New York: Chelsea House Publishing, 2007.

Ivar M. at 20:16, 6 December 2011

2011-12-06T20:16:09Z

← Older revision		Revision as of 20:16, 6 December 2011
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	== 1. The Western World Before the Crash ==		== The Western World Before the Crash ==

	The Great Crash of 1929 marked the end of the so-called carefree „Roaring Twenties“, a time of relative prosperity and economic well-being. The atrocities of World War I were a thing of the past and the future seemed promising. The production of luxury goods reached a new peak as more and more people started buying “must-have” items such as refrigerators, radios and cars not by cash but on credit. It was due to a change in the cultural mind-set that the traditional value of canniness gave way to this new and “easy way to buy”. Banks on the other hand encouraged this trend and were now keen to lend money to all kinds of people, whether it be a man of business or a mere blue-collar worker. By 1929, around 15 percent of all purchases were bought on credit. Furthermore, borrowed money was progressively used to buy stocks, all of which had increased in value throughout the 1920s. As such they were seen as a sure way to earn money the easy way: buy stocks on the stock market when the prices are low and sell them to others when the prices have gone up. Consequently, using borrowed money to buy stocks – also known as buying on margin – became a wide-spread practice for many common Americans. But in the end it were the Banks themselves which invested substantial amounts of money in the stock market, e.g. in companies such as General Motors, DuPont and RCA (Radio Corporation of America).		The Great Crash of 1929 marked the end of the so-called carefree „Roaring Twenties“, a time of relative prosperity and economic well-being. The atrocities of World War I were a thing of the past and the future seemed promising. The production of luxury goods reached a new peak as more and more people started buying “must-have” items such as refrigerators, radios and cars not by cash but on credit. It was due to a change in the cultural mind-set that the traditional value of canniness gave way to this new and “easy way to buy”. Banks on the other hand encouraged this trend and were now keen to lend money to all kinds of people, whether it be a man of business or a mere blue-collar worker. By 1929, around 15 percent of all purchases were bought on credit. Furthermore, borrowed money was progressively used to buy stocks, all of which had increased in value throughout the 1920s. As such they were seen as a sure way to earn money the easy way: buy stocks on the stock market when the prices are low and sell them to others when the prices have gone up. Consequently, using borrowed money to buy stocks – also known as buying on margin – became a wide-spread practice for many common Americans. But in the end it were the Banks themselves which invested substantial amounts of money in the stock market, e.g. in companies such as General Motors, DuPont and RCA (Radio Corporation of America).

	== 2. Prelude ==		== Prelude ==

	When the “Roaring Twenties” drew to a close signs of an economic crisis became evident: a decline in the textile, coal and farming industries as well as in business in general had already set in. Moreover, unemployment had grown throughout 1928 and construction of new homes – a warning sign for many experts – declined in 1927 and along with it the need for new consumer goods. New production methods and more effective machinery further exacerbated this situation since fewer factory workers were needed to produce the same amount of products: a vicious circle.		When the “Roaring Twenties” drew to a close signs of an economic crisis became evident: a decline in the textile, coal and farming industries as well as in business in general had already set in. Moreover, unemployment had grown throughout 1928 and construction of new homes – a warning sign for many experts – declined in 1927 and along with it the need for new consumer goods. New production methods and more effective machinery further exacerbated this situation since fewer factory workers were needed to produce the same amount of products: a vicious circle.
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	The recession was in full swing by mid-October. On 24th of October (“Black Thursday”) the industrial average dropped to previous June's level with many stocks losing the value they had acquired during the last four months. Therefore, many investors started to panic. As a consequence, 12,894,650 shares were traded by brokers on Black Thursday, thereby establishing a new record which by far exceeded the previous one (12th March 1928: 3,875,910 shares traded). Due to international trade relations the Canadian, London and other markets were affected by this first selling wave as well with prices falling as never before.		The recession was in full swing by mid-October. On 24th of October (“Black Thursday”) the industrial average dropped to previous June's level with many stocks losing the value they had acquired during the last four months. Therefore, many investors started to panic. As a consequence, 12,894,650 shares were traded by brokers on Black Thursday, thereby establishing a new record which by far exceeded the previous one (12th March 1928: 3,875,910 shares traded). Due to international trade relations the Canadian, London and other markets were affected by this first selling wave as well with prices falling as never before.

	== 3. „Black Tuesday“ ==		== „Black Tuesday“ ==


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	Since banks did take a big part in investing money in stocks, their customers began to empty their bank accounts as soon as they had heard about the falling prices and the subsequent selling frenzy at the NYSE. Most were afraid that there would not be any cash for them left if they wanted to withdraw their money. The effect was devastating: many banks went out of business altogether.		Since banks did take a big part in investing money in stocks, their customers began to empty their bank accounts as soon as they had heard about the falling prices and the subsequent selling frenzy at the NYSE. Most were afraid that there would not be any cash for them left if they wanted to withdraw their money. The effect was devastating: many banks went out of business altogether.

	== 4. Repercussions ==		== Repercussions ==

	Notwithstanding the seriousness of the crisis, the ''Times'' published an article saying: “the longer result of it [i.e. crash] will be restoration of the community's mental health and vision” (qtd. in Klein, 231). However, the Wall Street Crash of 1929 was a heavy blow the U.S. credit system that had played an active part in supporting the country's economic development. Along with further economic decline came rising unemployment rates (up to 25%) and the cutting of wages (up to 50%). Since so many ordinary families had spent all their savings and all their borrowed money on stock speculation, they had no means of paying rent or feeding themselves once unemployment struck. Especially the middle class was affected. Homelessness and disillusionment were the consequence. In contrast to the ''Times'', some economists like Alexander Noyes immediately recognized the danger of the crash saying: "A Stock Exchange panic foreshadows business depression, unemployment and hard times” (qtd. in Klein, 234). As time went by and the Great Depression began to take shape, Noyes' notion prevailed.		Notwithstanding the seriousness of the crisis, the ''Times'' published an article saying: “the longer result of it [i.e. crash] will be restoration of the community's mental health and vision” (qtd. in Klein, 231). However, the Wall Street Crash of 1929 was a heavy blow the U.S. credit system that had played an active part in supporting the country's economic development. Along with further economic decline came rising unemployment rates (up to 25%) and the cutting of wages (up to 50%). Since so many ordinary families had spent all their savings and all their borrowed money on stock speculation, they had no means of paying rent or feeding themselves once unemployment struck. Especially the middle class was affected. Homelessness and disillusionment were the consequence. In contrast to the ''Times'', some economists like Alexander Noyes immediately recognized the danger of the crash saying: "A Stock Exchange panic foreshadows business depression, unemployment and hard times” (qtd. in Klein, 234). As time went by and the Great Depression began to take shape, Noyes' notion prevailed.

Ivar M. at 13:58, 6 December 2011

2011-12-06T13:58:23Z

← Older revision		Revision as of 13:58, 6 December 2011
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	Unless that true value “catches up” with the stock price, the price will begin to fall. When a share of stock loses value, some people sell their shares, afraid they		Unless that true value “catches up” with the stock price, the price will begin to fall. When a share of stock loses value, some people sell their shares, afraid they
	will lose everything if they do not get rid of the devalued stock. If too many sell too quickly, panic can set in, with investors believing they won't get back at		will lose everything if they do not get rid of the devalued stock. If too many sell too quickly, panic can set in, with investors believing they won't get back at
	least what they paid for the share. This is what happened in October 1929.		least what they paid for the share. This is what happened in October 1929 (18)

	The recession was in full swing by mid-October. On 24th of October (“Black Thursday”) the industrial average dropped to previous June's level with many stocks losing the value they had acquired during the last four months. Therefore, many investors started to panic. As a consequence, 12,894,650 shares were traded by brokers on Black Thursday, thereby establishing a new record which by far exceeded the previous one (12th March 1928: 3,875,910 shares traded). Due to international trade relations the Canadian, London and other markets were affected by this first selling wave as well with prices falling as never before.		The recession was in full swing by mid-October. On 24th of October (“Black Thursday”) the industrial average dropped to previous June's level with many stocks losing the value they had acquired during the last four months. Therefore, many investors started to panic. As a consequence, 12,894,650 shares were traded by brokers on Black Thursday, thereby establishing a new record which by far exceeded the previous one (12th March 1928: 3,875,910 shares traded). Due to international trade relations the Canadian, London and other markets were affected by this first selling wave as well with prices falling as never before.

Ivar M. at 13:57, 6 December 2011

2011-12-06T13:57:25Z

← Older revision		Revision as of 13:57, 6 December 2011
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	The selling frenzy which began on Black Thursday continued and reached a new height on the 29th of October – Black Tuesday. It was the day of the big stockholders and investment trusts selling as much as possible, whereas the small investors had already lost everything the week before. Another record was established: 16,410,030 shares were traded on this day with a total loss in value of approximately 14 billion dollars (the 1929 budget of the U.S. Federal government was around $3 billion); a very drastic change indeed with far-reaching consequences even for the London Stock exchange which dissolved into pandemonium after the second wave of violent selling.		The selling frenzy which began on Black Thursday continued and reached a new height on the 29th of October – Black Tuesday. It was the day of the big stockholders and investment trusts selling as much as possible, whereas the small investors had already lost everything the week before. Another record was established: 16,410,030 shares were traded on this day with a total loss in value of approximately 14 billion dollars (the 1929 budget of the U.S. Federal government was around $3 billion); a very drastic change indeed with far-reaching consequences even for the London Stock exchange which dissolved into pandemonium after the second wave of violent selling.
	Few contemporaries realized the seriousness of the crash. Those who did noted its uniqueness: “Panics of the past were brought about by something fundamentally wrong with finance or business, crop failures, earthquakes, strained international relations, prohibitive rates for money, inflated inventories and the like. The recent break was due to the position of the market itself” (qtd. in Klein).		Few contemporaries realized the seriousness of the crash. Those who did noted its uniqueness: “Panics of the past were brought about by something fundamentally wrong with finance or business, crop failures, earthquakes, strained international relations, prohibitive rates for money, inflated inventories and the like. The recent break was due to the position of the market itself” (qtd. in Klein, 219).
	Since banks did take a big part in investing money in stocks, their customers began to empty their bank accounts as soon as they had heard about the falling prices and the subsequent selling frenzy at the NYSE. Most were afraid that there would not be any cash for them left if they wanted to withdraw their money. The effect was devastating: many banks went out of business altogether.		Since banks did take a big part in investing money in stocks, their customers began to empty their bank accounts as soon as they had heard about the falling prices and the subsequent selling frenzy at the NYSE. Most were afraid that there would not be any cash for them left if they wanted to withdraw their money. The effect was devastating: many banks went out of business altogether.

	== 4. Repercussions ==		== 4. Repercussions ==

	Notwithstanding the seriousness of the crisis, the Times published an article saying: “the longer result of it [i.e. crash] will be restoration of the community's mental health and vision” (qtd. in Klein). However, the Wall Street Crash of 1929 was a heavy blow the U.S. credit system that had played an active part in supporting the country's economic development. Along with further economic decline came rising unemployment rates (up to 25%) and the cutting of wages (up to 50%). Since so many ordinary families had spent all their savings and all their borrowed money on stock speculation, they had no means of paying rent or feeding themselves once unemployment struck. Especially the middle class was affected. Homelessness and disillusionment were the consequence. In contrast to the Times, some economists like Alexander Noyes immediately recognized the danger of the crash saying:” A Stock Exchange panic foreshadows business depression, unemployment and hard times”. As time went by and the Great Depression began to take shape, Noyes' notion prevailed.		Notwithstanding the seriousness of the crisis, the ''Times'' published an article saying: “the longer result of it [i.e. crash] will be restoration of the community's mental health and vision” (qtd. in Klein, 231). However, the Wall Street Crash of 1929 was a heavy blow the U.S. credit system that had played an active part in supporting the country's economic development. Along with further economic decline came rising unemployment rates (up to 25%) and the cutting of wages (up to 50%). Since so many ordinary families had spent all their savings and all their borrowed money on stock speculation, they had no means of paying rent or feeding themselves once unemployment struck. Especially the middle class was affected. Homelessness and disillusionment were the consequence. In contrast to the ''Times'', some economists like Alexander Noyes immediately recognized the danger of the crash saying: "A Stock Exchange panic foreshadows business depression, unemployment and hard times” (qtd. in Klein, 234). As time went by and the Great Depression began to take shape, Noyes' notion prevailed.

Ivar M. at 13:52, 6 December 2011

2011-12-06T13:52:56Z

← Older revision		Revision as of 13:52, 6 December 2011
Line 12:		Line 12:
	But the worst problem for the stock market by far was over-speculation, i.e. when speculators keep on borrowing money and buying stocks, thereby driving stock prices higher and higher. As a result, prices for many stocks were soon well above what companies were actually worth: the paper value did not match the true value of the company a share represented. Brenda Lange has highlighted the ensuing problem accurately:		But the worst problem for the stock market by far was over-speculation, i.e. when speculators keep on borrowing money and buying stocks, thereby driving stock prices higher and higher. As a result, prices for many stocks were soon well above what companies were actually worth: the paper value did not match the true value of the company a share represented. Brenda Lange has highlighted the ensuing problem accurately:

	Unless that true value “catches up” with the stock price, the price will begin to fall. When a ~~shore~~ of stock loses value, some people sell their shares, afraid they		Unless that true value “catches up” with the stock price, the price will begin to fall. When a share of stock loses value, some people sell their shares, afraid they
	will lose everything if they do not get rid of the devalued stock. If too many sell too quickly, panic can set in, with investors believing they won't get back at		will lose everything if they do not get rid of the devalued stock. If too many sell too quickly, panic can set in, with investors believing they won't get back at
	least what they paid for the share. This is what happened in October 1929.		least what they paid for the share. This is what happened in October 1929.
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	The selling frenzy which began on Black Thursday continued and reached a new height on the 29th of October – Black Tuesday. It was the day of the big stockholders and investment trusts selling as much as possible, whereas the small investors had already lost everything the week before. Another record was established: 16,410,030 shares were traded on this day with a total loss in value of approximately 14 billion dollars (the 1929 budget of the U.S. Federal government was around §3 billion); a very drastic change indeed with far-reaching consequences even for the London Stock exchange which dissolved into pandemonium after the second wave of violent selling.		The selling frenzy which began on Black Thursday continued and reached a new height on the 29th of October – Black Tuesday. It was the day of the big stockholders and investment trusts selling as much as possible, whereas the small investors had already lost everything the week before. Another record was established: 16,410,030 shares were traded on this day with a total loss in value of approximately 14 billion dollars (the 1929 budget of the U.S. Federal government was around $3 billion); a very drastic change indeed with far-reaching consequences even for the London Stock exchange which dissolved into pandemonium after the second wave of violent selling.
	Few contemporaries realized the seriousness of the crash. Those who did noted its uniqueness: “Panics of the past were brought about by something fundamentally wrong with finance or business, crop failures, earthquakes, strained international relations, prohibitive rates for money, inflated inventories and the like. The recent break was due to the position of the market itself” (qtd. in Klein).		Few contemporaries realized the seriousness of the crash. Those who did noted its uniqueness: “Panics of the past were brought about by something fundamentally wrong with finance or business, crop failures, earthquakes, strained international relations, prohibitive rates for money, inflated inventories and the like. The recent break was due to the position of the market itself” (qtd. in Klein).
	Since banks did take a big part in investing money in stocks, their customers began to empty their bank accounts as soon as they had heard about the falling prices and the subsequent selling frenzy at the NYSE. Most were afraid that there would not be any cash for them left if they wanted to withdraw their money. The effect was devastating: many banks went out of business altogether.		Since banks did take a big part in investing money in stocks, their customers began to empty their bank accounts as soon as they had heard about the falling prices and the subsequent selling frenzy at the NYSE. Most were afraid that there would not be any cash for them left if they wanted to withdraw their money. The effect was devastating: many banks went out of business altogether.

Ivar M. at 13:48, 6 December 2011

2011-12-06T13:48:56Z

← Older revision		Revision as of 13:48, 6 December 2011
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	24 October 1929 (~~"Black Thursday"~~). ~~One~~ of the most serious stock market crashes in the history of the ~~United States~~. It ~~led~~ to a ~~severe worldwide~~ economic ~~depression~~ (~~"Great Depression"~~) which affected all ~~Western industrialised countries~~.		The 29th of October 1929, often referred to as “Black Tuesday”, was the day of the Great Crash of the New York Stock Exchange (NYSE). It was one of the most serious stock market crashes in the history of the USA and is seen by many experts as the beginning of a severe world-wide economic depression which came to be known as the “Great Depression” that affected all Western industrialized countries.



			== 1. The Western World Before the Crash ==

			The Great Crash of 1929 marked the end of the so-called carefree „Roaring Twenties“, a time of relative prosperity and economic well-being. The atrocities of World War I were a thing of the past and the future seemed promising. The production of luxury goods reached a new peak as more and more people started buying “must-have” items such as refrigerators, radios and cars not by cash but on credit. It was due to a change in the cultural mind-set that the traditional value of canniness gave way to this new and “easy way to buy”. Banks on the other hand encouraged this trend and were now keen to lend money to all kinds of people, whether it be a man of business or a mere blue-collar worker. By 1929, around 15 percent of all purchases were bought on credit. Furthermore, borrowed money was progressively used to buy stocks, all of which had increased in value throughout the 1920s. As such they were seen as a sure way to earn money the easy way: buy stocks on the stock market when the prices are low and sell them to others when the prices have gone up. Consequently, using borrowed money to buy stocks – also known as buying on margin – became a wide-spread practice for many common Americans. But in the end it were the Banks themselves which invested substantial amounts of money in the stock market, e.g. in companies such as General Motors, DuPont and RCA (Radio Corporation of America).

			== 2. Prelude ==

			When the “Roaring Twenties” drew to a close signs of an economic crisis became evident: a decline in the textile, coal and farming industries as well as in business in general had already set in. Moreover, unemployment had grown throughout 1928 and construction of new homes – a warning sign for many experts – declined in 1927 and along with it the need for new consumer goods. New production methods and more effective machinery further exacerbated this situation since fewer factory workers were needed to produce the same amount of products: a vicious circle.
			But the worst problem for the stock market by far was over-speculation, i.e. when speculators keep on borrowing money and buying stocks, thereby driving stock prices higher and higher. As a result, prices for many stocks were soon well above what companies were actually worth: the paper value did not match the true value of the company a share represented. Brenda Lange has highlighted the ensuing problem accurately:

			Unless that true value “catches up” with the stock price, the price will begin to fall. When a shore of stock loses value, some people sell their shares, afraid they
			will lose everything if they do not get rid of the devalued stock. If too many sell too quickly, panic can set in, with investors believing they won't get back at
			least what they paid for the share. This is what happened in October 1929.

			The recession was in full swing by mid-October. On 24th of October (“Black Thursday”) the industrial average dropped to previous June's level with many stocks losing the value they had acquired during the last four months. Therefore, many investors started to panic. As a consequence, 12,894,650 shares were traded by brokers on Black Thursday, thereby establishing a new record which by far exceeded the previous one (12th March 1928: 3,875,910 shares traded). Due to international trade relations the Canadian, London and other markets were affected by this first selling wave as well with prices falling as never before.

			== 3. „Black Tuesday“ ==


			The selling frenzy which began on Black Thursday continued and reached a new height on the 29th of October – Black Tuesday. It was the day of the big stockholders and investment trusts selling as much as possible, whereas the small investors had already lost everything the week before. Another record was established: 16,410,030 shares were traded on this day with a total loss in value of approximately 14 billion dollars (the 1929 budget of the U.S. Federal government was around §3 billion); a very drastic change indeed with far-reaching consequences even for the London Stock exchange which dissolved into pandemonium after the second wave of violent selling.
			Few contemporaries realized the seriousness of the crash. Those who did noted its uniqueness: “Panics of the past were brought about by something fundamentally wrong with finance or business, crop failures, earthquakes, strained international relations, prohibitive rates for money, inflated inventories and the like. The recent break was due to the position of the market itself” (qtd. in Klein).
			Since banks did take a big part in investing money in stocks, their customers began to empty their bank accounts as soon as they had heard about the falling prices and the subsequent selling frenzy at the NYSE. Most were afraid that there would not be any cash for them left if they wanted to withdraw their money. The effect was devastating: many banks went out of business altogether.

			== 4. Repercussions ==

			Notwithstanding the seriousness of the crisis, the Times published an article saying: “the longer result of it [i.e. crash] will be restoration of the community's mental health and vision” (qtd. in Klein). However, the Wall Street Crash of 1929 was a heavy blow the U.S. credit system that had played an active part in supporting the country's economic development. Along with further economic decline came rising unemployment rates (up to 25%) and the cutting of wages (up to 50%). Since so many ordinary families had spent all their savings and all their borrowed money on stock speculation, they had no means of paying rent or feeding themselves once unemployment struck. Especially the middle class was affected. Homelessness and disillusionment were the consequence. In contrast to the Times, some economists like Alexander Noyes immediately recognized the danger of the crash saying:” A Stock Exchange panic foreshadows business depression, unemployment and hard times”. As time went by and the Great Depression began to take shape, Noyes' notion prevailed.


			Sources:

			Klein, Maury. ''Rainbow's End. The Crash of 1929''. Oxford: Oxford University Press, 2001.

			Lange, Branda. ''The Stock Market Crash of 1929. The End of Prosperity''. New York: Chelsea House Publishing, 2007.

← Older revision		Revision as of 12:54, 10 December 2015
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	29 October 1929~~, often referred to~~ as "Black Tuesday"~~, was the day~~ of the great crash of the New York Stock Exchange (NYSE)~~. It was~~ one of the most serious stock market crashes in the history of the USA and is seen by many experts as the beginning of a severe world-wide economic depression which came to be known as the Great Depression that affected all Western industrialised countries.		29 October 1929. Also known as "Black Tuesday". Day of the great crash of the New York Stock Exchange (NYSE); one of the most serious stock market crashes in the history of the USA and seen by many experts as the beginning of a severe world-wide economic depression which came to be known as the [[Great Depression]] that affected all Western industrialised countries.


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	== The Western World Before the Crash ==		== The Western World Before the Crash ==

	The Great Crash of 1929 marked the end of the so-called ~~carefree~~ Roaring Twenties, a time of relative prosperity and economic well-being. The atrocities of [[Great War\|World War I]] were a thing of the past and the future seemed promising. The production of luxury goods reached a new peak as more and more people started buying must-have items such as refrigerators, radios and cars on credit, instead of paying for it in cash. It was due to a change in the cultural mind-set that the traditional value of thriftiness gave way to this new and "easy" way to buy. Banks encouraged this trend and were keen to lend money to all kinds of people, whether it be a man of business or a mere blue-collar worker. By 1929, around 15 percent of all purchases were bought on credit. Furthermore, borrowed money was progressively used to buy stocks, all of which had increased in value throughout the 1920s. As such they were seen as a sure way to earn money the easy way: buy stocks on the stock market when the prices are low and sell them to others when the prices have gone up. Consequently, using borrowed money to buy stocks – also known as buying on margin – became a wide-spread practice for many Americans. But in the end it were the ~~Banks~~ themselves which invested substantial amounts of money in the stock market, e.g. in companies such as General Motors, DuPont and RCA (Radio Corporation of America).		The Great Crash of 1929 marked the end of the carefree so-called Roaring Twenties, a time of relative prosperity and economic well-being. The atrocities of [[Great War\|World War I]] were a thing of the past and the future seemed promising. The production of luxury goods reached a new peak as more and more people started buying must-have items such as refrigerators, radios and cars on credit, instead of paying for it in cash. It was due to a change in the cultural mind-set that the traditional value of thriftiness gave way to this new and "easy" way to buy. Banks encouraged this trend and were keen to lend money to all kinds of people, whether it be a man of business or a mere blue-collar worker. By 1929, around 15 percent of all purchases were bought on credit. Furthermore, borrowed money was progressively used to buy stocks, all of which had increased in value throughout the 1920s. As such they were seen as a sure way to earn money the easy way: buy stocks on the stock market when the prices are low and sell them to others when the prices have gone up. Consequently, using borrowed money to buy stocks – also known as buying on margin – became a wide-spread practice for many Americans. But in the end it were the banks themselves which invested substantial amounts of money in the stock market, e.g. in companies such as General Motors, DuPont and RCA (Radio Corporation of America).

	== Prelude ==		== Prelude ==
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	When the Roaring Twenties drew to a close signs of an economic crisis became evident: a decline in the textile, coal and farming industries as well as in business in general had already set in. Moreover, unemployment had grown throughout 1928 and construction of new homes – a warning sign for many experts – declined in 1927 and along with it the need for new consumer goods. New production methods and more effective machinery further exacerbated this situation since fewer factory workers were needed to produce the same amount of products: a vicious circle.		When the Roaring Twenties drew to a close signs of an economic crisis became evident: a decline in the textile, coal and farming industries as well as in business in general had already set in. Moreover, unemployment had grown throughout 1928 and construction of new homes – a warning sign for many experts – declined in 1927 and along with it the need for new consumer goods. New production methods and more effective machinery further exacerbated this situation since fewer factory workers were needed to produce the same amount of products: a vicious circle.

	But the worst problem for the stock market by far was over-speculation, i.e. when speculators keep on borrowing money and buying stocks, thereby driving stock prices higher and higher. As a result, prices for many stocks were soon well above what companies were actually worth: the paper value did not match the true value of the company a share represented. Brenda Lange has highlighted the ensuing problem ~~accurately~~:		But the worst problem for the stock market by far was over-speculation, i.e. when speculators keep on borrowing money and buying stocks, thereby driving stock prices higher and higher. As a result, prices for many stocks were soon well above what companies were actually worth: the paper value did not match the true value of the company a share represented. Brenda Lange has highlighted the ensuing problem:

	:Unless that true value “catches up” with the stock price, the price will begin to fall. When a share of stock loses value, some people sell their shares, afraid they will lose everything if they do not get rid of the devalued stock. If too many sell too quickly, panic can set in, with investors believing they won't get back at least what they paid for the share. This is what happened in October 1929. (18)		:Unless that true value “catches up” with the stock price, the price will begin to fall. When a share of stock loses value, some people sell their shares, afraid they will lose everything if they do not get rid of the devalued stock. If too many sell too quickly, panic can set in, with investors believing they won't get back at least what they paid for the share. This is what happened in October 1929. (18)
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	The selling frenzy which began on Black Thursday continued and reached a new height on 29 October – Black Tuesday. It was the day of the big stockholders and investment trusts selling as much as possible, whereas the small investors had already lost everything the week before. Another record was established: 16,410,030 shares were traded on this day with a total loss in value of approximately 14 billion dollars (the 1929 budget of the U.S. Federal government was around $3 billion); a very drastic change indeed with far-reaching consequences even for the London Stock exchange which dissolved into pandemonium after the second wave of violent selling.		The selling frenzy which began on Black Thursday continued and reached a new height on 29 October – Black Tuesday. It was the day of the big stockholders and investment trusts selling as much as possible, whereas the small investors had already lost everything the week before. Another record was established: 16,410,030 shares were traded on this day with a total loss in value of approximately 14 billion dollars (the 1929 budget of the U.S. Federal government was around 3 billion dollars); a very drastic change indeed with far-reaching consequences even for the London Stock exchange which dissolved into pandemonium after the second wave of violent selling.

	Few contemporaries realized the seriousness of the crash. Those who did noted its uniqueness: “Panics of the past were brought about by something fundamentally wrong with finance or business, crop failures, earthquakes, strained international relations, prohibitive rates for money, inflated inventories and the like. The recent break was due to the position of the market itself” (qtd. in Klein 219).		Few contemporaries realized the seriousness of the crash. Those who did noted its uniqueness: “Panics of the past were brought about by something fundamentally wrong with finance or business, crop failures, earthquakes, strained international relations, prohibitive rates for money, inflated inventories and the like. The recent break was due to the position of the market itself” (qtd. in Klein 219).

	Since banks did take a big part in investing money in stocks, their customers began to empty their bank accounts as soon as they had heard about the falling prices and the subsequent selling frenzy at the NYSE. Most were afraid that there would not be any cash for them left if they wanted to withdraw their money. The effect was devastating: many banks went out of business altogether.		Since banks did take a big part in investing money in stocks, their customers began to empty their bank accounts as soon as they had heard about the falling prices and the subsequent selling frenzy at the NYSE. Most were afraid that there would not be any cash for them left if they wanted to withdraw their money. The effect was devastating: many banks went out of business altogether.