Some information on the Wall Street Crash

Revision notes on the Wall Street Crash for A2 History.

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1. What is meant by trading on the margin?
"Trading on the margin" is buying shares on credit with a 14 day window in which to pay the
money lenders back hopefully making a profit on the shares when you sell them.
2. What is the Dow Jones Industrial Index?
The Dow Jones Industrial Average is one of several stock market indices. The index is used as
a way to gauge the performance of the industrial component of America's stock markets. It
consists of the top public companies in the United States.
3. Why did the American Government not interfere in the Wall Street Crash?
The American Government did not interfere in the Wall Street crash because the situation
began to solve itself as bankers came to the rescue by buying shares for more than their
current market value to restore faith in the stock market and so calm was restored.
4. Why did ordinary people want to invest in the stock market?
Ordinary people wished to invest in the stock market as they saw it as an easy way to
make a lot of money relatively quickly with very little effort.
5. Why would the statements of public officials have an impact on investors?
The statements of public officials reassured investors because they knew that the most
powerful banks in the country were prepared to prevent a recurrence.
6. Who were the losers and who were the winners in the Wall Street crash?
The losers were those who bought at the top and sold at the bottom. The winners were
those who bought at the bottom and sold at the top.
7. What was the GlassSteagall Act?
The first GlassSteagall Act, passed in February 1932, allowed that government obligations as
well as commercial paper can be used as reserve in banks. Due to the reserve ratio system,
banks were able to increase credit, and more money was in circulation. It was signed into law
by President Herbert Hoover.
The second GlassSteagall Act, passed on 16 June 1933, and officially named the Banking Act
of 1933, introduced the separation of bank types according to their business (commercial and
investment banking), and it founded the Federal Deposit Insurance Company for insuring bank


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