Wall Street Crash of 1929 facts for kids
The Wall Street Crash happened in the New York Stock Exchange on Tuesday, October 29, 1929, and is now known as Black Tuesday. Because of the crash, banks began to fail and businesses closed. This caused worldwide panic, which started the Great Depression. Stock prices did not reach the same level until late 1954.
The crash was the beginning of the 10-year Great Depression that affected all Western industrialized countries. Countries forced high tariffs and restricted imports. International trade declined. Soup kitchens were the place to go for food for many people. The Depression ended in the United States when America started to get ready for World War II in 1939.
The stock-exchange grew popular among the "regular people" of the United States and hundreds of thousands of Americans began to invest a great amount of money in the stock market, creating an economic bubble. Many were borrowing money to buy more stocks.
At the turn of the 20th century, stock market speculation was restricted to professionals, but the 1920s saw millions of 'ordinary Americans' investing in the New York Stock Exchange. By August 1929, brokers had lent small investors more than two-thirds of the face value of the stocks they were buying on margin – more than $8.5bn was out on loan.
The amount of money out on loan was more than the entire amount of currency circulating in the U.S. at the time. When a stock price decreased below the amount of borrowed money, the owner had to sell his shares to pay the debt. This caused prices to decrease more. Years later, special rules were made to limit the use of debt in this way.
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Wall Street Crash of 1929 Facts for Kids. Kiddle Encyclopedia.