Wall Street Crash

Question 1

Why did the stock market rise

Answer 1

• Confidence
• buying on the margin
• laissez-faire government policy

Question 2

What is buying on the margin

Answer 2

When you would only pay 10% for a stock yourself

90% came from bank

Question 3

Which economist warned of a crash in Sep 1929

Answer 3

Roger Babson

Question 4

What did babson say in sep 1929

Answer 4

‘Sooner or later, a crash is coming, and it may be terrific’

Question 5

Reaction to babson’s words in sep 1929

Answer 5

None. Largely ignored

Question 6

When did babson warn of a ‘terrific’ crash

Answer 6

September 1929

Question 7

When was Black Thursday

Answer 7

Oct 24 1929

Question 8

What happened on Black Thursday

Answer 8

• first day of panic selling
• 13 million shares traded
• prices dropped sharply
• chaos ensued

Question 9

How many shares were traded on Black Thursday

Answer 9

13 million shares

• prices dropped sharply
• $26 billion in lost shares
• chaos

Question 10

What happened on October 24 1929

Answer 10

Black Thursday

Question 11

When was black Monday

Answer 11

Oct 28 1929

Question 12

What happened on black Monday

Answer 12

• 28 oct 1929
• market lost 13% of its value

Question 13

What was the name of Oct 28 1929

Answer 13

Black Monday

Question 14

How much value did the market lose on black Monday

Answer 14

13% of its value

Question 15

When was black Tuesday

Answer 15

Oct 29 1929

Question 16

Waht happened on black Tuesday

Answer 16

• 16.4 million shares traded
• billions of $ were wiped from the market
• main date of crash

Question 17

How many shares traded on black Tuesday

Answer 17

16.4 million

Question 18

When was black Tuesday

Answer 18

Oct 29 1929

Question 19

What is seen as the main date/day of the crash

Answer 19

Oct 29 1929
- black Tuesday

Question 20

Two features of the causes of the Wall Street crash 1929

Answer 20

1. Over confidence followed by sharp panic selling
2. Hyper-inflated stock prices

Question 21

Why were people so confident in the stock market

Answer 21

• for the most part stock prices rose
• many made millions
• seen as impossible for it to stop rising

Question 22

Why did people begin to panic sell

Answer 22

• In later 1929 (4th quarter of 1929), some investors began to sell shares
• so stock prices fell
• this led to panic
• and therefore bigger drops in stock price
• this continued until crash

Question 23

Why did some investors begin to sell shares in late 1929

Answer 23

• because they could see that the stock market was hyper-inflated
• also warnings from economists like Babson of an imminent crash

Question 24

Why was there hyper-inflation

Answer 24

• lots of insider trading + manipulating of stock prices
• buying on the margin meant that people made more risky bets using only 10% of their own money

Question 25

Why did banks fail after the crash

Answer 25

- they were giving out loans to too many people, too easily - such as buying on the margin where people could borrow up to 90% of a stock price

Question 26

Two key features of consequences of the Wall Street crash

Answer 26

1. Share prices dropped 2. Mass poverty + unemployment

Question 27

Why did share prices drop in 1929

Answer 27

- loss in confidence in the market - panic selling

Question 28

How much did shares drop in 1929

Answer 28

By $64billion

Question 29

Why were people poorer now

Answer 29

- many lost savings due to bank failure - many unemployed

Question 30

What % of Americans were unemployed by 1933

Answer 30

25% - 15 million Americans unemployed

Question 31

Why were so many people unemployed by 1933

Answer 31

- businesses failed

Question 32

Why did businesses fail

Answer 32

- banks failed - less demand

Question 33

Why was there less demand for businesses after crash

Answer 33

- people had less money as they lost their savings - less disposable income

Question 34

How many banks failed by the early 1930s

Answer 34

9,000 banks