1920s economic roller coaster

For the most part, the 1920s was a period of extreme boom with Canada creating record quantities of crops. Unfortunately, Canada was too dependent on its staple products such as wheat as an export. When competition from the United States and Australia came to export wheat, less countries were buying Canadian wheat which hurt Canada’s economy. Furthermore, during the boom, Canada’s dependence on America rose as well. The United States was now Canada’s largest export market and anything that happened to America’s economy would directly affect Canada. Canada’s dependence grew because of the weakness of European countries as a cause of the war. Nevertheless, Canadians kept their confidence in the economy as more and more investors were buying stock. Then, in the months leading up to the great depression, the stock market became an economic roller coaster. It all began on March 25, 1929, when the first of several mini crashes occurred. Each mini crash would eventually recover only to have another mini crash come. It was a nervous time for investors around the world as their financial life was at stake. During the summer, the market appeared to stabilize and it appeared that investors had survived the roller coaster, unfortunately, the “ride” was ready for it’s biggest drop. By September, the bear market was firmly established meaning that the market was steadily decreasing. On Thursday October 24, 1929, a record 12,894,650 shares changed hands on the New York stock exchange. That was almost 4 times the amount of the previous record set in the previous year. By the end of the day, some stocks had recovered a little giving some relief in a day of panic. On Monday, October 28, 1929, the trend continued with 9.25 million shares trading places. But unlike Thursday, the losses did not recover which set the stage for Black Tuesday, the most infamous day in Wall Street history.
The are different explanations on what happened on Black Tuesday and the reasons why 16.4 million shares were traded, smashing the 5 day old record. At the time, most investors were buying stock on a margin which meant that they only paid at a fraction of the cost for their stock. Instead of paying full price, people could pay ½ and pay the difference when the stock increased in value. However, if the stock decreased in value, the investor would have to cover the loss as well as the remaining margin. On Tuesday, businesses were asking for money from the brokers who were asking for the margin from the shareholders. The shareholders who were unable to pay the margin quickly sold their stock which decreased the stock’s value even more. There was a sort of snowball effect where as more people sold their stock, it forced even more people to sell theirs. Thousands of companies had their stock values plummet as a result, some lowering as much as 50%. Little did they know, that this was only the beginning of a long and destructive crash. For several years after Black Tuesday, the market continued to crash and in 3 years, the market had lost a total of 89%. Today, financial historians and university classes study the roller coaster and the factors surrounding it. The historical eight months from March to October will forever be known as the day that changed the world.