Wall Street Crash of 1929

The Wall Street Crash of 1929, also known the Great Crash was the United States Stock Market crash of October 29, 1929 ("Black Tuesday"), which precipitated a worldwide collapse of share values and triggered the Great Depression – ten years of global economic crises with disastrous levels of unemployment across all the industrialized countries apart from the U.S.S.R.

After the end of World War One, the world economy was bolstered by a reconstruction period of. In the early to mid-1920s, several were inflicted on the labor unions which had been engaging in revolutionary struggles in the wake of the Russian Revolution and the War. These events created conditions for a period of sustained economic prosperity that was known as the “Roaring Twenties”. The market value of nearly all shares on the United States stock market rose to unprecedented heights and reached a peak at the end-of August 1929. Stock prices started to decline and fell by 24 percent in September and October alone, while the speculation continued, but the decline in prices came to a sudden end on 18th October, when the U.S. Stock Market started to fall precipitately. The first day that real panic set in on October 24 (“Black Thursday”) – the market lost 11% of its value at the opening bell and a record 12894650 shares were traded. Major investment companies and banks purchased stocks in an attempt to stem the panic and hold up share prices, however the panic started again on “Black Monday”, October 28, 1929, when the Dow declined by approximately 13%. On “Black Tuesday”, October 29, the market dropped nearly 12%, 16,410,030 shares were sold on the New York Stock Exchange in one day and share prices on the stock market collapsed completely. Billions of dollars were lost, wiping out many investors, and the stock tickers ran hours behind due to the fact that the machinery was not able to handle the enormous volume of stocks that was being traded. By mid-November 1929, the value of the shares on the New York stock exchange had declined by 40 percent, a loss of $ 26 billion.

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Skyrocketing unemployment and bankruptcies spread from the United States to all the countries in the world, except the Soviet Union, where production continued to increase after the devastation of the Wars of Intervention (1918 to 1922). The Soviet Union was relatively unaffected by the Wall Street Crash, firstly due to the fact that it was a planned economy and did not depend on speculation, and secondly because it had been more-or-less isolated from the economy of the world. Although Russia had accounted for only 4 percent of the global industrial production in 1929, this had increased to 12 percent by 1939. The Great Depression lasted until the late 1930s with fourteen million unemployed in the United States alone, many with little means of livelihood until President Roosevelt’s New Deal was brought in.

The stock markets had collapsed before, indeed a 10 year business cycle of bust and boom was quite ordinary up to that time, however the notably rampant speculation of the preceding decade of boom, inflating the value of the shares, and the proliferation of investment trusts and holding companies and the extent of the huge bank loans in the United States had accumulated a large amount of fictitious capital, and the stock market collapse made the crash especially spectacular. The scale of capitalist development meant that the effects of the great crash were more catastrophic than ever before; all the sector s of the economy were tied up in share issues and bank loans. When the value of shares fell, the people and institutions that had invested in them lost a lot money, including the banks that had loaned money to failed companies; banks that were in trouble called in their loans, borrowers were inevitably not able to pay and were re-possessed and their businesses and companies closed down; creditors remained unpaid and employees lost their jobs, triggering a never-ending chain of bankruptcies and ejecting millions of dollars onto the dole-queues; when the industries closed down people did not have any other means of sustenance. The preceding rapid-growth of the global market meant that, as the old truism went, “When the United States sneeze, the rest other countries in the world caught a cold”, and the stock markets crashed all around the world after the Wall Street Crash, plunging the whole world into the Great Depression.

There have been several larger crashes since the great crash, but they have not had the same extent of effect as the Wall Street Crash of 1929. This is primarily due to the fact that the share market is only one comparatively minor avenue for speculating and even if the share market was totally wiped out, it would only have a partial impact.

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