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THE WALL STREET CRASH
The stock market crash in the United States in 1929 was huge and it led to a severe and lasting economic crisis in the world. Many bankers and industrialists lost their money and reputations. Some went to prison and others committed suicide.
Share prices on the New York stock exchange had begun rising in 1924, and in 1928 and 1929 they rocketed to unbelievable levels. In spring 1929 there was a break in the rising prices when the Federal Reserve Bank said it might raise interest rates to slow down the boom. However, a major bank, the National City Bank, assured investors that it would continue to lend money to them at affordable rates.
Soon the market took off again. People could buy stock for 10% of its value and borrow the remaining 90%. The lending rate varied from 7% to 12%. Almost everyone was optimistic. One economist, at the peak of the boom, said that people generally agreed 'stocks are not at present overvalued'.
It all ended on 21 October, 1929. The market opened badly and there was heavy selling. 25 Confidence in the market disappeared. There was a rumour that the big bankers were getting out of the market. Share prices fell dramatically and kept on falling. The boom was over. But its consequences would last for years to come.
II. Form new groups of three people, each of whom has read a different text. Exchange information and complete the chart below.
III. Discuss these questions.
What are the similarities and differences in the three speculations?
What do you think people will speculate in during the next 20 years?
IV. Work in groups. Find words or phrases in the texts which are similar in meaning to the definitions below. The first group to finish is the winner.
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