Glossary of Stock Market Terms - Wall Street Crash
1929 |
Wall
Street Crash of 1929 : The 1929
Wall Street Crash refers to the dates in
late October of 1929 during which the American
stock market crashed, causing widespread
panic through the population and ultimately
solidifying the beginning of The Great Depression.
Prior to October
of 1929, America experienced economic growth
and prosperity, experiencing what many now
call the "roaring twenties". Although
the stock market was known to fluctuate
with instability, most economists thought
the market had reached a plateau that was
relatively permanent. This period of prosperity
was known as a bull market.
After a period of declining stocks in early
October, investors saw moderate recovery
in the market but confidence was fragile.
This decline helped lead to the ultimate
market crash on October 24, 1929, otherwise
known as Black Thursday. On this day more
than 12 million shares were traded, fueling
public panic.
On Friday, leading financiers bought shares
in "blue chip" stocks such as
steel for inflated prices to keep the market
stable, a technique used to help the market
recover from decline in 1907. Although the
purchases helped maintain a steady market
on Friday, public panic set in again over
the weekend and stocks crashed again on
Monday and Tuesday of the following week
(October 28th and 29th) and became known
as Black Monday and Tuesday.
Many Americans had borrowed money in order
to invest in the stock market and lenders
were known to let people borrow up to 2/3
of the cost of their stock. When the market
crashed, individuals were unable to pay
back their loans, causing many banks and
institutions to go bankrupt. Consequently,
these lenders were unable to pay back savings
or loans they had made, causing a chain
of events that led to the demise of many
lending institutions and bankruptcy for
thousands of people.
The market experienced moderate recovery
but remained low due to lack of investments
and poor moral. As a result, America fell
into The Great Depression during which much
of the population experienced levels of
poverty. Some economists believe the 1929
Wall Street Crash happened as a result of
an economic bubble that would have eventually
caused the Depression. Others, however,
feel the crash caused the economic downfall
of America in the late 1920s.
Also called : Black Tuesday, Black
Thursday, Black Monday, The Crash of '29,
The Great Depression.
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