The Wall Street Crash, 1929

The Wall Street Crash, 1929

• The Wall Street Crash refers to the drastic fall of stock market prices on the New York Stock Exchange in October 1929.
• This event signified the start of the Great Depression, a severe economic recession that lasted until the late 1930s.
• The beginning was on “Black Thursday”, October 24, where panic selling began, followed by “Black Tuesday”, October 29, where share prices collapsed completely.

Causes Of The Wall Street Crash

• A key cause was the speculative bubble where investors, believing the economic boom would continue, borrowed heavily to buy shares, driving prices up to unsustainable levels.
• Companies were not doing as well as their stock prices indicated, creating “overpriced” stocks.
• Financial institutions and investors were engaging in high-risk practices, with little government regulation.

Consequences Of The Wall Street Crash

• The collapse of the stock market wiped out billions of dollars of wealth, causing consumers to reduce their spending and slowing down production.
• Many banks having invested heavily in the stock market, or loaned money to investors to buy shares, faced huge losses and went bankrupt. This led to a major banking crisis.
• Unemployment rose enormously as businesses failed and the economy went into recession, marking the start of the Great Depression.

Government Response To The Wall Street Crash

• Initially, the government followed a policy of laissez-faire, encouraging the economy to correct itself.
• However, with the increasing severity of the Depression, President Franklin D. Roosevelt introduced his “New Deal” plan in 1933 to provide relief, recovery and reform.