Wall Street Crash-The crash followed a speculative boom that had taken hold in the late 1920s. During the later half of the 1920s,

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Wall Street- Economic Fundamentals

The crash followed a  boom that had taken hold in the late 1920s. During the later half of the 1920s, steel production, building construction, retail turnover, automobiles registered, even railway receipts advanced from record to record. The combined net profits of 536 manufacturing and trading companies showed an increase, in fact for the first six months of 1929, of 36.6% over 1928, itself a record half-year. Iron and steel led the way with doubled gains. Such figures set up a crescendo of stock-exchange speculation which had led hundreds of thousands of Americans to invest heavily in the stock market. A significant number of them were  to buy more stocks. By August 1929, brokers were routinely lending small investors more than two-thirds of the face value of the stocks they were buying. Over $8.5 billion was out on loan, more than the entire amount of currency circulating in the U.S. at the time.

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The rising share prices encouraged more people to invest; people hoped the share prices would rise further. Speculation thus fueled further rises and created an . Because of , investors stood to lose large sums of money if the market turned down—or even failed to advance quickly enough. The average  (price to earnings) ratio of S&P Composite stocks was 32.6 in September 1929, clearly above historical norms.

Good harvests had built up a mass of 250,000,000 bushels of wheat to be 'carried over' when 1929 opened. By May there was also a winter-wheat crop of 560,000,000 bushels ready for harvest in the Mississippi ...

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