Notes

The 1920s were a period of economic prosperity. Businesses increased their production, which led to a decrease in unemployment. Access to credit was easier, allowing more people to buy consumer goods. The population is optimistic, especially because their standard of living is increasing. Many investors, encouraged by the strength of the economy, do not hesitate to speculate on the stock market. They borrowed large sums of money to buy company shares on the stock market in the hope of selling them at a profit later. The high demand for these shares increased their value. By the end of the 1920s, however, the population was increasingly indebted. Consumption slowed down, which led to a drop in demand that was no longer sufficient to sell off the companies' stocks. Unsold products accumulated in the warehouses. In October 1929, as a result of this overproduction, several companies announced that they were making less money. They lowered their production and prices, which caused anxiety among stockholders. Since these shares will not offer the desired return, many investors try to sell their shares quickly before the downturn. Panic took hold of the markets and the number of sellers outnumbered the number of buyers, causing the stock market to collapse. On October 24, 1929, it is Black Thursday: the stock market crash. Panic swept through the New York Stock Exchange and the market collapsed. Many investors are ruined. Those who had used credit to buy stocks were unable to pay back the banks, to the point where some closed their doors. Drawn into this debacle, many companies went bankrupt or drastically reduced their production, and the United States entered a serious economic crisis that would last for nearly a decade, dragging Canada and Europe with it. It was the beginning of the Great Depression.