Quick questions on The Wall Street Crash of 1929: HSC Modern History USA

Stock prices rose modestly through the mid-1920s and then accelerated. The Dow Jones Industrial Average rose from around 100 in 1926 to 191 on 3 March 1928 and to its peak of 381 on 3 September 1929, a near-quadrupling. Trading volume rose from around 230 million shares in 1923 to 1,125 million in 1928.

The market peaked at 381 on 3 September 1929 and drifted sideways through September. The fall accelerated in October.

A stock crash is not automatically a depression. The Crash became the Depression through three channels.

The gold standard linked currencies to fixed parities. A country running a balance of payments deficit lost gold, contracted its money supply, and forced deflation; one running a surplus accumulated gold but did not necessarily expand. The system transmitted the American shock abroad.

John Kenneth Galbraith (The Great Crash 1929, 1955) is the foundational popular account; emphasises speculative mania and policy denial.

Brokers' loans (the credit financing margin purchases) rose from 1 billion dollars in 1920 to 8.5 billion by September 1929. Margin requirements were 10 per cent; a small fall in stock prices wiped out leveraged positions.

Pyramided structures like Samuel Insull's utility empire and Goldman Sachs Trading Corporation magnified gains and losses. The Insull empire collapsed in 1932 owing investors around 3 billion dollars.

12.9 million shares traded (around three times normal volume). Prices fell around 11 per cent at the open. A bankers' pool led by Charles Mitchell of National City Bank stepped in around midday and stabilised the close, with the Dow down only around 2 per cent.

The Dow fell 13 per cent in a day. The bankers' pool did not return.

16.4 million shares traded (a record that stood until 1968). The Dow fell another 12 per cent. Around 14 billion dollars of paper wealth was destroyed in two days, around 30 billion dollars over two weeks.

The Dow fell from 381 on 3 September 1929 to 198 on 13 November 1929 (around 48 per cent), then rallied to 294 by April 1930, then fell continuously to its low of 41 on 8 July 1932. Total decline from peak to trough was around 89 per cent. The 1929 peak was not regained until 1954.

Industrial production fell around 46 per cent from 1929 to 1933. Real GDP fell around 30 per cent. Investment collapsed from around 16 per cent of GDP to around 4 per cent.

The American banking system had over 25,000 banks, mostly small, unbranched, and state-chartered. Around 9,000 banks failed between 1930 and 1933, mostly in the rural Midwest and South.

The Hawley-Smoot Tariff (17 June 1930), Hoover's signature trade measure, raised average tariffs to around 60 per cent. Over 1,000 economists signed a public letter opposing it. Around 28 countries retaliated.

The Crash exposed the structural weaknesses; bank failures, monetary contraction, and protectionism made them catastrophic.