Depression And Crash
Chapter 2
Chapter 2: The Wall Street Crash and the causes of the Great Depression in the USA
The Wall Street Crash and the causes of the Great Depression in the USA
This chapter has three aims: to give an account of the Wall Street Crash; to examine the causes of the Great Depression; and to consider the effects of the Crash. It considers the events leading to the Crash and examines how healthy the US economy actually was before it by looking at some of the underlying causes of the Great
Depression. Finally, it discusses the relationship of the Wall Street Crash to the onset of the Great Depression.
You need to consider the following questions throughout this chapter:
� What chain of events led to the Wall Street Crash?
� How widespread were the signs that the economy was faltering?
� What was the relationship between the Wall Street Crash and the onset of the Great
Depression?
� How strong was the American economy in the 1920s and how real was the prosperity?
1 The Wall Street Crash
Key question: What chain of events led to the Wall Street Crash?
In October 1929, the New York Stock Exchange crashed. It handled about
61 per cent of stocks and shares transactions in the USA. Crashes in other stock exchanges throughout the country and abroad soon followed. While the collapse in Wall Street had been forecast by many financial experts, their warnings had gone largely unheeded. The event was to affect millions of people, most of whom did not own stocks and shares.
The stampede to sell
On Thursday 24 October 1929, a massive amount of selling began in the
New York Stock Exchange. This forced prices down and led to more selling still as brokers feared they would be left with worthless stock. By 11a.m., a mad panic had set in. US Steel, which had opened that morning at
205.5 points, was down to 193.5, General Electric had fallen from 315 points to 283 and Radio Corporation of America had collapsed from 68.75 points to
44.5. No one appeared to understand what was going
Chapter 2: The Wall Street Crash and the causes of the Great Depression in the USA
The Wall Street Crash and the causes of the Great Depression in the USA
This chapter has three aims: to give an account of the Wall Street Crash; to examine the causes of the Great Depression; and to consider the effects of the Crash. It considers the events leading to the Crash and examines how healthy the US economy actually was before it by looking at some of the underlying causes of the Great
Depression. Finally, it discusses the relationship of the Wall Street Crash to the onset of the Great Depression.
You need to consider the following questions throughout this chapter:
� What chain of events led to the Wall Street Crash?
� How widespread were the signs that the economy was faltering?
� What was the relationship between the Wall Street Crash and the onset of the Great
Depression?
� How strong was the American economy in the 1920s and how real was the prosperity?
1 The Wall Street Crash
Key question: What chain of events led to the Wall Street Crash?
In October 1929, the New York Stock Exchange crashed. It handled about
61 per cent of stocks and shares transactions in the USA. Crashes in other stock exchanges throughout the country and abroad soon followed. While the collapse in Wall Street had been forecast by many financial experts, their warnings had gone largely unheeded. The event was to affect millions of people, most of whom did not own stocks and shares.
The stampede to sell
On Thursday 24 October 1929, a massive amount of selling began in the
New York Stock Exchange. This forced prices down and led to more selling still as brokers feared they would be left with worthless stock. By 11a.m., a mad panic had set in. US Steel, which had opened that morning at
205.5 points, was down to 193.5, General Electric had fallen from 315 points to 283 and Radio Corporation of America had collapsed from 68.75 points to
44.5. No one appeared to understand what was going