Editing Wall Street crash of 1929 (section)

==Analysis==
The crash followed a [[speculation|speculative]] boom that had taken hold in the late 1920s. During the latter half of the 1920s, steel production, building construction, retail turnover, automobiles registered, and even railway receipts advanced from record to record. The combined net profits of 536 manufacturing and trading companies showed an increase, in the first six months of 1929, of 36.6% over 1928, itself a record half-year. Iron and steel led the way with doubled gains.<ref>{{cite news|url=http://nla.gov.au/nla.news-article85141129|title=Broad Facts of, USA Crisis|first=Edward|last=Shann|author-link=Edward Shann|newspaper=[[Daily News (Perth, Western Australia)|The Daily News]]|location=Perth, Western Australia|date=November 1, 1929|access-date=November 22, 2012|page=6 (Edition: Home Final Edition)|via=[[National Library of Australia]]}}</ref> Such figures set up a crescendo of stock-exchange speculation that led hundreds of thousands of Americans to invest heavily in the stock market. Many people were [[leverage (finance)|borrowing money]] to buy more stocks. By August 1929, brokers were routinely lending small investors more than two-thirds of the face value of the stocks that they were buying. Over $8.5 billion was out on loan,<ref>{{cite news|url=http://www.ft.com/cms/s/0/7173bb6a-552a-11dd-ae9c-000077b07658.html|title=Crashes, Bangs & Wallops|last=Lambert|first=Richard|date=July 19, 2008|work=[[Financial Times]]|access-date=September 30, 2008|archive-url=https://web.archive.org/web/20081003034410/http://www.ft.com/cms/s/0/7173bb6a-552a-11dd-ae9c-000077b07658.html|archive-date=October 3, 2008|url-status=dead|quote=At the turn of the 20th-century stock market speculation was restricted to professionals, but the 1920s saw millions of 'ordinary Americans' investing in the New York Stock Exchange. By August 1929, brokers had lent small investors more than two-thirds of the face value of the stocks they were buying on margin – more than $8.5bn was out on loan.}}</ref> more than the entire amount of currency circulating in the United States at the time.<!-- This ref is to the home page of a film, can a better source be found? (OK if anyone wants to just use this as the source, just asking)--><ref name=PBSNYDoc>[https://www.pbs.org/wnet/newyork/ ''New York: A Documentary Film''] {{Webarchive|url=https://web.archive.org/web/20110220143837/http://www.pbs.org/wnet/newyork/ |date=February 20, 2011 }} PBS</ref><ref>{{cite book |url=https://books.google.com/books?id=v3-1r1gHcb4C&q=volume+of+dollars+in+circulation+in+1929&pg=PA14 |title=Facing the facts: an economic diagnosis|isbn=9780836901276|access-date=September 30, 2008|last1=Kemmerer|first1=Edwin Walter|year=1932|publisher=Books for Libraries Press }}</ref>

The rising share prices encouraged more people to invest on the hope that share prices would rise further. Speculation thus fueled further rises and created an [[economic bubble]]. Because of [[margin buying]], investors stood to lose large sums of money if the market turned down or even if it failed to advance quickly enough. The average [[price to earnings ratio]] of [[S&P/TSX Composite Index|S&P Composite stocks]] was 32.6 in September 1929,<ref>{{cite web |url=http://press.princeton.edu/chapters/s7922.html |title=Irrational Exuberance, Second Edition |access-date=February 3, 2007 |last=Shiller |first=Robert |date=March 17, 2005 |publisher=[[Princeton University Press]] |archive-date=January 1, 2007 |archive-url=https://web.archive.org/web/20070101032943/http://press.princeton.edu/chapters/s7922.html |url-status=dead }}</ref> clearly above historical norms.<ref>{{Cite news| url = http://www.businessinsider.com/shiller-pe-analysis-2013-4|title= The Stock Market's Valuation Rarely Gets This High|author= Doug Short|work=[[Business Insider]]|date = April 3, 2013}}</ref> According to the economist [[John Kenneth Galbraith]], the exuberance also resulted in a large number of people placing their savings and money in leverage investment products like [[Goldman Sachs]]'s "Blue Ridge trust" and "Shenandoah Trust", which crashed in 1929 as well, resulting in losses to banks of $475 billion in 2010 dollars (${{Inflation|US|475|2010|r=2}}&nbsp;billion in {{Inflation-year|US}}).<ref>{{cite book|last=Galbraith|first=John Kenneth|author-link=John Kenneth Galbraith|title=[[The Great Crash, 1929]]|chapter=In Goldman Sachs We Trust|location=Boston|publisher=Houghton Mifflin|year=1954|isbn=0-395-85999-9}}, cited in {{cite magazine|last=Taibbi|first=Matt|author-link=Matt Taibbi|title=The great American bubble machine|url=https://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405|access-date=November 3, 2017|magazine=[[Rolling Stone]]|date=April 5, 2010}}</ref>

[[File:Portrait of Sir George Paish (cropped).jpg|thumb|upright=0.9|The British economist [[Sir George Paish]] predicted the May slump.]]
Good harvests had built up a mass of 250 million bushels of wheat to be "carried over" when 1929 opened. By May there was also a winter wheat crop of 560 million bushels ready for harvest in the Mississippi Valley. The oversupply caused such a drop in wheat prices that the net incomes of farmers from wheat were threatened with extinction. Stock markets are always sensitive to the future state of commodity markets,{{citation needed|date=January 2019}} and the slump in Wall Street that had been predicted for May by [[Sir George Paish]] arrived on time. In June 1929, the position was saved by a severe drought in the Dakotas and the Canadian West, as well as unfavorable seed times in Argentina and eastern Australia. The oversupply was now wanted to fill the gaps in the 1929 world wheat production. From 97¢ per bushel in May, the price of wheat rose to $1.49 in July. When it was seen that figure would make American farmers get more for their crop that year than in 1928, stocks went up again.<ref>{{Cite book|last=DiNunzio|first=Mario R.|url=https://books.google.com/books?id=3hGJBAAAQBAJ&q=american+farmers+great+depression&pg=PA117|title=The Great Depression and New Deal: Documents Decoded|date=July 23, 2014|publisher=ABC-CLIO|isbn=978-1-61069-535-0|language=en}}</ref>

In August, the wheat price fell when France and Italy were bragging about a magnificent harvest, and the situation in Australia improved. That sent a shiver through Wall Street and stock prices quickly dropped, but word of cheap stocks brought a fresh rush of "stags" (amateur speculators) and investors. Congress voted for a $100 million relief package for the farmers on the hope of stabilizing wheat prices, but by October, the price had fallen to $1.31 per bushel.<ref>{{cite news|url=http://nla.gov.au/nla.news-article21480897|title=Grain Plunges|newspaper=[[The Courier-Mail]]|location=Brisbane, Qld|date=October 26, 1929|access-date=November 22, 2012|page=19|publisher=National Library of Australia}}</ref>

Other important economic barometers were also slowing or even falling by mid-1929, including car sales, house sales, and steel production. The falling commodity and industrial production may have dented even American self-confidence, and the stock market peaked on September&nbsp;3 at 381.17 just after Labor Day, and it started to falter after [[Roger Babson]] issued his prescient "market crash" forecast. By the end of September, the market had dropped 10% from the peak (the "Babson Break"). Selling intensified in early and mid-October, with sharp down days punctuated by a few up days. [[Panic selling]] of massive proportion started the week of October&nbsp;21 and intensified and culminated on October&nbsp;24, October&nbsp;28, and especially October&nbsp;29 ("Black Tuesday").<ref>{{cite news|url=http://nla.gov.au/nla.news-article16596498|title=Wild Selling. New York Panic|newspaper=[[The Sydney Morning Herald]]|location=Sydney, NSW|date=October 26, 1929|access-date=November 22, 2012|page=17|publisher=National Library of Australia}}</ref>

The president of the Chase National Bank, [[Albert H. Wiggin]], said at the time: 
{{blockquote|text=We are reaping the natural fruit of the orgy of speculation in which millions of people have indulged. It was inevitable, because of the tremendous increase in the number of stockholders in recent years, that the number of sellers would be greater than ever when the boom ended and selling took the place of buying.<ref>{{cite news|url=http://nla.gov.au/nla.news-article16597217|title=Second Crash|newspaper=[[The Sydney Morning Herald]]|location=Sydney, NSW|date=October 30, 1929|access-date=November 20, 2012|page=17|publisher=National Library of Australia}}</ref><ref>{{Cite book|title=Insider trading law, ethics, and reform|last=Anderson, John P. |date=June 7, 2018 |page=26|publisher=Cambridge University Press |isbn=9781316603406|oclc=1048586916}}</ref>}}