Also known as the Great Crash, the Wall Street Crash of 1929 is considered the most devastating financial panic in the history of U.S. due to its duration and impact. It led to huge financial losses and the U.S. stock market was not able to recover from it for many years. Although it is not considered the sole cause of the Great Depression, it did play a role and accelerated the crisis. Know about the causes, the panic and the effects of this stock market crash though these 10 interesting facts.
1. Just before the Wall Street Crash of 1929, people were investing heavily in stocks
The decade following World War I was a period of boom in the U.S. due to post-war optimism and a drastic change in the lifestyle of Americans. It was marked by unprecedented consumerism with families being able to afford more than ever before and people buying goods on installment plans, which was a relatively new concept. People invested heavily in stocks and such was the positive sentiment that investors perhaps believed that the stock market would rise indefinitely and was a one way bet.
2. Over exuberance was a major reason behind the Wall Street crash
A major reason behind the crash was that share prices were not driven by economic fundamentals but by over exuberance and false expectation of the investors. The stock market was seen as an opportunity to earn big akin to the gold rush. By 1929, 2 out of every 5 dollars a bank loaned were used to purchase stocks. Share prices became much higher than their real value. The Dow Jones Industrial Average (a stock market index) increased 400% in the period between1924 and 1929.