The day the US stock market crashed – level 2
After World War I, European countries were in big debts. Hyperinflation was very high in Germany. People paid 3 billion marks for bread. Yet for America, the 1920s were a golden age. Many things were being made, and salaries were going up, too. There were a lot of luxury things on the market.
There was no indication that these good times could end. Also buying and selling stocks became very popular. Stock prices were still going up and many people who didn’t understand stocks started to buy them.
These people also didn’t have enough cash for buying stocks, so they borrowed money from banks and big businessmen. They believed that the stocks would go up in value, and they could sell them later and make a lot of money.
Then October 24, 1929 came. It was a day which people later called Black Thursday. On that day, a lot of people decided to sell their stocks. Yet there was no one who wanted to buy them. Prices began to go down. The market fell apart as a lot of people lost all their money and still owed the banks.
Many small investors, banks, and companies went bankrupt. Hundreds of thousands of Americans found themselves homeless and without work.
Difficult words: debt (money which you must pay to somebody), hyperinflation (when the cost of things goes up very high), stock (a piece of paper which is a part of a company), borrow (when somebody lends you money), call (give a name), owe (have a debt), go bankrupt (lose all your money in a business).
What were the long-term effects of the 1929 stock market crash on the American economy?
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