The Great Wall Street Crash, which happened just before the Great Depression in the 1930s, is now part of North American folklore. People talk about the crash, what caused it, and what happened as if they know a lot about it, even though few people really understand the basics of what happened and even fewer understand the details. This article will give a short summary of the crash, look at some of the myths that have grown up around this time in American history, and answer some questions, like why the crash happened and if something like it could happen again.
The crash started on October 24, 1929, and the slide lasted for three business days, ending on October 29, 1929. As you can see, the crash did not happen in the 1930s, as many people think. Black Thursday is the day the crash started, and Black Tuesday is the day it ended. Over 13 million shares were sold on the first Thursday of the crash, when a lot of people who were afraid to spend rushed to sell their shares. Several bankers and businessmen got together to try to stop the slide by buying up blue-chip stocks, a strategy that had worked in 1909. This would only work for a short time, though. Over the weekend, when the stock markets were closed, the media published wrap-ups of the week, which made investors even more worried. By Monday, people were waiting to leave because they were scared and their nerves were on edge because of the news. Again, industrial giants and other businesses tried to stop the panic by buying more stock to show they believed in the system. However, the stock market continued to fall. It took almost a quarter of a decade for the market to get its value back.
As with any myth, the story of the Wall Street Crash of 1929 is full of false ideas. The Great Depression did not start because of the Crash. In fact, a lot of economists and historians still don't know how much the Crash contributed. The economic forecasts were bad before Wall Street fell, and the Depression hurt poor people the most because they couldn't even afford to think about stocks. Most of what made these people poor was that they couldn't farm well. There also wasn't the wave of suicides that is often talked about. A few investors did kill themselves out of depression, but most people agree that the number was so small that you could count them on one hand.
What made this Crash happen? Since the market was doing so well, a lot of Americans were investing, even though they couldn't afford to. These people were betting with their money. This means that they bought stocks with the intention of selling them later for a higher profit, and they borrowed money from banks to get the money to invest. When prices started going down, people realised they wouldn't be able to pay their bills, let alone make any money. They ran to get out as quickly as they could. So that panics like this don't happen again, it is now illegal to buy on speculation.
