A severe financial crisis in the USA, also known as the “Great Crash”, the “Wall Street Crash”, or the “Great Panic”. During the first half of 1929 an unprecedented boom took place on the New York Stock Exchange. However, prices began to fall from late September and selling began. In less than a month there was a 40% drop in stock value, and this fall continued over the next three years. Its causes were numerous. Although the post-war US economy seemed to be booming, it was on a narrow base and there were fundamental flaws. The older basic industries, such as mining and textiles, were weak, agriculture was depressed, unemployment at four million was unacceptably high, and international loans were often poorly secured. A new rich class enjoyed a flamboyant lifestyle, which too many people tried to copy by means of credit and stock-market speculation, within an unsound banking system. Once the business cycle faltered, a panic set in. The effects of the crash were hugely to accelerate a downward spiral: real estate values collapsed, factories closed, and banks began to call in loans, precipitating the worldwide Great Depression.
Subjects: World History.