Le Crash de Wall Street (document en anglais)

Wall Street Crash of 1929   After World War I the economy started to grow rapidly. It was at this particular time that people started to invest in stocks. Investing in stocks was considered an easy way of making money. Consequently, more and more people showed interest in stocks.   Even those who could not afford the investment wanted to play along; thus, they started to take out loans in great numbers.   An increasing demand for goods led to rising prices. One can describe this phenomenon as follows: If a good stimulates demand, its price rises. If a good does not stimulate demand, its price drops. In 1929, the demand for stocks was so high that its price rose up to 300%. Broker Charles Merrill - who is also known under the name Merrill Lynch - described this movement as: ...   The first massive sales of shares took place between October 18 and 23, 1929. This led to a heavy drop in prices.   Only one day after the big stock sales - October 24, 1929 - panic was spread through the crowds, as the rumor of big investors selling all their securities was believed. Within a few minutes of time, the price dropped by 10%. As a consequence, people stopped buying stocks, which led to a collapse of prices. More than 12 million shares were sold that night, indicating a number, which is three times as high as the usual sales figures. A collaboration of twelve major American banks tried to break the fall and rescue the market. They were not successful though.   The crash had negative effects on the stock market for the coming years. With a total decrease of 13% the Dow Jones - the barometer of the U.S. stock market - came to an end on October 24, 1929. The financial system of the United States was highly affected by the Wall Street Crash: The habit of purchasing securities on credit led to the downfall of the American bank system. As the market collapsed, investors did not have any means to pay back their creditors, which led to they bankruptcy of banks and financial institutions.   The consequences were severe: Banks ceased issuing credits, and companies reduced their production to a minimum. For example, automobile factories reduced their production from 600 000 to 100 000 vehicles a month. People were very concerned about their future. Unemployment increased dramatically: 12 million people were unemployed at the beginning of the 1930s, which is eight times as high as the unemployment rate of 1926. The Wall Street Crash had not only effects on the economy of the United States, but on the world economy as a whole. Investors lost confidence, banks restricted their credit offerings, and big enterprises suffered from a lack of liquid assets. Many small companies went bankrupt, causing a further weakening of the banking system. As a consequence, many depositors withdrew their money. The lack of stabilization mechanisms caused smaller banks to go bankrupt, leading to the banking crisis of 1930. Protectionist measures, such as the Hawley-Smoot Act of 1930, failed to fight against the crisis, affecting the economy of other countries as well. The New Deal, particularly the National Industrial Recovery Act of 1933, was an attempt by the American government to recover from the crisis. However, it was not successful. In 1937, the economy fell into relapse. Only by entering World War II, the government achieved to recover the country’s economy.   The ‘Stock Market Collapse’ will be illustrated by the following examples: (Make a listing)   The

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