York Stock Exchange, this was where stocks and shared of all kinds are bought and sold, some two or three million. Stocks and shares might be bought and sold while company’s shares might go up a few points or cent in value. On a bad day points might go down in value two or three points.
Share prices on Wall Street fell dramatically. This fall became known as the Wall Street Crash and it led to the Depression, which hit the USA in October 1929. Six of the richest banker in New York hurriedly met to discuss the crises. They agreed to spend $40,000,000 each buying shares hoping it would encourage people to buy and sell shares. When the stock exchange closed that afternoon shares had stopped falling, it seemed like the crises was over.
It was possible to buy stocks and shares on credit. This was called buying on the margin and enabled speculators to sell off shares at a profit before paying what they owed. In this way it was possible to make a considerable amount of money without a great deal of investment. Speculation on the stock market, many were ordinary people buying shares on the margin, it was easy to buy shares, wait for the price to rise and then sell them for a profit. It was a guaranteed way of making money, lots of money – as long as there were people who wanted to buy shares. The problem was that many people were buying shares with borrowed money. Over the weekend something which made another big fall in shares, certain brokers had sold shares on the margin, they had borrowed money from banks to buy shares. These banks that had loaned people money were now demanding repayment. The system of credit worked well as long as everyone was confident that share prices would go on rising. In October 1929 everybody was trying to sell their shares. Panic spread on the Wall Street stock exchange, share prices began to fall steeply, this panic brought about the Wall Street crash.
Stock broker started selling shares in large numbers; stronger companies had gone down dozens. General electrical shares which had opened at 315 points fell to 283 points. United steel crashed 205 points down to 193 points, Radio share plummeted by 24 points.
On October 29, later nicknamed "Black Tuesday," the stock market crashed. On that day, over 16 million shares of stock were sold and the market fell over 14 billion dollars. By comparison, the entire budget of the U.S. Government that year was three billion dollars. Brokers screamed as hysterical visitors were taken away by the police. In one day, the United States lost more capital than it had spent in all of World War I.
