The Wall Street Crash

What was the Wall Street Crash?

The Wall Street Crash was an event in 1929 when the value of shares in the stock market suddenly plummeted. It led to huge problems in the American economy.

When did the Wall Street Crash happen?

The Wall Street Crash happened between October and November 1929.

What led to the Wall Street Crash?

The Wall Street Crash occurred when confidence in share prices fell, leading to a huge fall in their value.

• ❖ Increasing demand for shares meant their prices rose rapidly, but this was based on over-confidence rather than on the value of the businesses themselves.
• ❖ Many speculators 'borrowed on the margin' to buy shares, getting into debt with banks and intending to pay it off with the profit that they made when they sold their shares.
• ❖ From about 1927 there were signs of an economic slowdown, such as slowly rising unemployment and over-stocking of warehouses because of overproduction.
• ❖ In mid-1929, some experienced investors began to worry that share prices would fall. They sold their shares, and prices then began to drop.

What happened during the Wall Street Crash?

There were three key events:

• ❖ Once shareholders realised their shares prices were dropping, they began to panic and sell them.
• ❖ Because of the fall in demand for shares, their prices dropped rapidly.
• ❖ Share prices plummeted in October and November as more and more investors desperately tried to sell their shares before they lost any more money.

What did the Wall Street Crash mean for the American economy?

By the time share prices levelled out, they were worth only a third of their September value. $26 billion had disappeared from the American economy.

Why did the Wall Street Crash affect the League of Nations?

The Wall Street Crash led to a decline in cooperation between countries in the 1930s, as they became more concerned about their own economy than helping the League of Nations to promote international cooperation.