What caused Black Thursday (1929)?


I don’t really understand stock markets, and I don’t feel like the school books do a good job of explaining it. I could really use some help.

In: 7

During WWI the governments had been forced to invest a lot in infrastructure and technology to win the war. Things like airplanes, shipping, steel industry and assembly lines was been advanced a great deal during the war. And at the end of the war a large number of veterans were given houses and money for their service. And their skills as commanders and specialists made them attractive workers. Winning the war also gave the winning sides a lot of newly conquered land in the form of colonies as well as direct war reperations from the loosing powers. The new technology and the people willing to consume this new technology gave a huge economic boom.

A lot of people thought this economic prograss was going to last forever. And they were therefore willing to go very far to invest in new ventures. People built huge skyscrapers expecting there would be a demand for offices, huge factories and associated communities for workers were being built expecting there would be lots of work building cars, tools or appliances. And a lot of this was being funded by loans as even the banks thought the economy would continue to improve forever. So the loans would be repaid.

The problem was that the economic boom did not last. The war reperations eventually ended as Germany could not pay. The government war bonds was due to expire. And people had bought the houses, cars and appliances they could.