DRAMATIC EVENTS ON WALL STREET MARKED A
WATERSHED IN THE HISTORY OF THE 20TH CENTURY
Almost in a matter of days, the booming 1920s collapsed into the greatest economic slump of modern times. Hopes of sustained recovery, peace and stability after the Great War were dashed. The stump destroyed governments and provided opportunities for political extremism that were to Lead ultimately to the Second World War.
Recovery after the First World War was underpinned by the booming American economy. US loans supported major economies, like that of Germany, which would otherwise have struggled. For US investors opportunities seemed boundless. Fashionable stocks tike Radio, which rose fivefold in 18 months, fuelled speculation. Brokers’ loans totaled $7 billion by September 1929, creating a giant speculative bubble involving over a million investors.
By the early autumn of 1929, some economic indicators showed a downturn. Then, in late October, uncertainty turned to panic. On 2/1 October, a frenzy of setling hit the market, trading four times the volume of a normal ‘busy’ day. When bankers’ attempts to steady the market failed, it went into free-fall. By 30 October stocks had halved their September value, loans could not be covered….
