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The crash that shook the US

In October 1929, the US stock market crashed, plunging millions into panic and poverty. In this lesson, we explore the emotional and cultural shock of the day that changed America.
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The Roaring Twenties' illusion

The 1920s were a decade of confidence. Skyscrapers soared, radios crackled in every home, and ordinary people poured money into stocks — convinced the good times would last forever. Wall Street became a symbol of modern magic: invest, and you'll get rich.
But behind the glamour was a dangerous illusion. Stock speculation became a national pastime.
Stock speculation is the purchase of stocks with the expectation of price increases, typically involving significant risk and borrowed capital.
Stocks were wildly overvalued, and many Americans borrowed money to invest — believing nothing could go wrong. They didn't ask if the market would rise, only how fast.

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Common questions

No, not by itself. The crash was a symptom of a shaky economy and a powerful catalyst, but not the primary cause. Low wages, heavy debt, weak farming, and overproduction were already straining the economy. The crash then shattered confidence and sped up the global collapse into the Great Depression.

Buying on margin meant purchasing shares with mostly borrowed money, often putting down as little as 10% of the price. It let ordinary people invest far more than they had, which pushed prices up in the boom. When prices fell, those investors were wiped out, and banks that had lent the money took losses too.

About 25 % in four days, and roughly 80 to 90 % by 1932. The Dow dropped that first 25 % between Black Thursday and Black Tuesday in late October 1929, then kept sliding for years. The market needed about 25 years to regain its 1929 level.

No. Speculation was the main cause, but overproduction of goods and farm crops hurt company profits, and a mild recession hit in the summer of 1929. The Federal Reserve also raised interest rates in August. Together, these pushed prices down in September and October, which set off investor panic.

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