Wall Street Crash Flashcards
Causes
In October 1929, the New York stock exchange on Wall Street crashed, handling about 61% of stocks and shares transactions in the USA.
By 1929, supply of goods exceeded demand.
Wall Street Crash
On 24 Oct 1929, 12.8 million shares changed hands on the New York Stock Exchange.
By the end of the day, the NYSE’s value of shares had fallen by $4 billion.
By the end of November, $30 billion had been wiped off share values.
Between oct and Dec 1929, unemployment rose from 500,000 to four million
Averages wages fell 16% from 1929 to 1931.
By 1932, the US steel industry operated at 12% capacity.
Uneven distribution of wealth
In 1929, Booking’s Institute’s survey discovered that 60% of American families had annual incomes of less than $2,000.
In the region of Southeast in South Carolina: per capita income for the non-agricultural workers of the economy averaged $412 and the farmers was $129.
Stability of unemployment
Robert and Lynd found that during the first nine months of 1929, 72% of workers had been unemployed at some point in their lives and 43% had been jobless for over a month.
Union membership: early 1920s, 4 million and during late 1920s, 1 million.
Instability of ‘get-rich-quick’ schemes
Ponzi in the early 1920s conned thousands of people into investing in his ventures. He promised a 50% profit in 90 days.
However, demand tailed off in 1926 with hurricanes killing 400 people and making 50,000 homeless.
From 1927-29, Americans went ‘Wall Street crazy’.
According to the Wall Street Index, stock in the Radio Corporation of America rose from 85 to 420 points in the course of 1928.
Twelve regulatory Reserve Banks represented the interests of bankers.
In the 1920s, 30,000 banks in the USA were small and unable to deal with financial problems.
Overproduction
During the 1920s, for every four businesses that succeeded, three failed.
Fisher, a Yale economist estimated that 80% of people living in America were living close to subsistence.
