Posted on January 1, 2011 by Ed Hollingway in Personal Finance // 1,131 Comments

The great Wall Street Crash just previous to the Fantastic Depression of the 1930s has become a part of North American legend. Individuals speak from the crash, its causes and its consequences, with fantastic authority, although few people actually understand the fundamentals that led for the crash, and fewer even now the intricacies involved in it. This write-up will detail a short review from the crash, analyze some from the myths evolving out of this period in American history, and also answer some questions such as why the crash happened, and if something like it could happen again.

The crash began on October 24, 1929 and also the slide continued for three business days, ending on October 29 1929 (as we can see, the crash did not occur within the ‘30s, as many individuals believe) The first day with the crash is known as Black Thursday, and the final day is called Black Tuesday. The crash began when a rush of nervous spenders panicked and rushed to sell their shares- above 13 million stocks were sold on that very first Thursday. In an attempt to halt the slide, a number of bankers and businessmen gathered and tried to rally the numbers by buying up blue-chip stocks, a tactic that had worked in 1909. This was to prove only a temporary fix, however. More than the weekend, while the stock markets were closed, the media added to the fear of investors as the published the wrap ups towards the week. By Monday, a fearful populace, nerves on edge due towards the reports, were waiting to liquidate. Again, industrial giants and other businesses tried to halt the panic by demonstrating their faith in the system by buying more stock, but the slide would not stop. The market did not recover its value until almost a quarter of a decade later.

As with any legend, the Wall Street Crash of 1929 carries with it a number of mythical misconceptions. To commence with, the Crash did not lead towards the Fantastic Depression. In fact, several monetary analysts and historians are even now not sure to what degree the Crash even contributed. The economic forecasts were poor prior to Wall Street fell, and it was poor individuals who could not even afford to believe about stocks that were the most affected by the Depression. For these individuals, poverty was mostly caused by extremely poor farming conditions. There was also not the onslaught of suicides which is commonly referred to- a handful of traders did succumb to depression, but their numbers are generally agreed to have been very little indeed- enough to count on one hand.

What was it that caused this Crash? Simply because the market had been performing so nicely, numerous Americans were investing- many a lot more, in fact, than could afford it. These individuals were investing on speculation. This means that they were buying stocks with an eye to selling them in the future for any higher profit, and to achieve the capital to invest they borrowed from banks. When prices began to drop, folks realized they would not have the ability to pay their debt, let alone make any funds, They rushed to get out as soon as possible. To prevent panics for example this in the future, buying on speculation is now illegal.