Great Depression & Wall Street Crisis Essay Example | Topics and Well Written Essays - 3250 words

Great Depression & Wall Street Crisis - Essay Example Prior to October 1929, market investment was highly expedient. From 1923, American economy experienced bullish trend in the Wall Street. Lending by banks and brokers was higher than the general face value of the stocks being purchased. Household investors and novice sponsors further aggravated the progress in stock market. Increasing development and prices of iron and steel industry further amplified prices due to speculation. Further introduction of installment in the banking system allowed many families to own what they could not afford otherwise (Suddath, n.p). At this scenario, the demand and supply forces came into play. Due to higher demand and excess of borrowed money, general rate of trade was at its highest. Presence of many small banks despite having no ability to lend without having substantial savings to back up these loans, further strengthen speedy stock exchange. This trend of trading was further increased by the presence of marginal buyers. Marginal buyers only paid 1 0-20 percent of the actual value of shares whereas the remaining amount was credited by brokers or banks. Due to little requirement of investment capital, number of novice investors who were susceptible to negative speculation, increased. On October 29, 1929, best known as Black Tuesday, the stock market crashed completely.However, with increase in the stock prices and overall economic development, small traders and famers extended their production scale which lead to excessive supply of wheat and other eatables.