Crash and Depression
Read the first text and make its summary.
In the heart of New York City lies a narrow street enclosed by the walls of high office buildings. Its name is Wall Street.
One Thursday afternoon in October 1929, a workman outside an upper floor window of a Wall Street office found himself staring into the eyes of four policemen. They reached out to catch hold of him. “Don’t jump!” shouted one of the policemen. “It’s not that bad!” “Who’s going to jump?” asked the surprised worker. “I’m just washing windows!”
To understand this incident we need to look at what had been happening in Wall Street in the months and years before that October afternoon in 1929.
Wall Street is the home of the New York Stock Exchange. Here dealers called brokers buy and sell valuable pieces of paper. The pieces of paper are share certificates. Each certificate represents a certain amount of money invested in a company.
Every year in the 1920s the sales of cars, radios and other consumer goods rose. This meant bigger profits for the firms which made them. This in turn sent up the value of shares in such firms.
Owning shares in a business gives you the right to a share of its profits. But you can make money from shares in another way. You can buy them at one price, then, if the company does well, sell them later at a higher one.
More and more people were eager to get some of this easy money. Like most other things in the United States in the 1920s, you could buy shares on credit. Many people borrowed large amounts of money from the banks to buy shares in this way – “on the margin”, as it was called. Their idea was to spot shares that would quickly rise in value, buy them at one price and then sell at a higher one a few weeks later. They could then pay back the bank, having made a quick profit.
By the fall of 1929 the urge to buy shares had become a sort of fever. Prices went up and up.
Yet some people began to have doubts. By the fall of 1929 the profits being made by many American firms had been decreasing for some time. If profits were falling, thought more cautious investors, then share prices, too, would soon fall. Slowly, such people began to sell their shares. Soon so many people were selling shares that prices did start to fall. A panic began. By the end of the year the value of all shares had dropped by $40,000 million. Thousands of people, especially those who had borrowed to buy on the margin, found themselves facing debt and ruin. Some committed suicide. This was what the policemen thought that the window cleaner was planning.
This collapse of American share prices was known as the Wall Street Crash. It marked the end of the prosperity of the 1920s.
A writer described what it was like to be jobless and homeless in an American city in the early 1930s. What is the general mood of this passage and how is it created?
“You get shoved out early; you get your coffee and start walking. A couple of hours before noon you get in line. You eat and start walking. At night you sleep where you can. You don’t talk. You eat what you can. You walk. No one talks to you. You walk. It’s cold, and you shiver and stand in doorways or sit in railroad stations. You don’t see much. You forget. You walk an hour and forget where you started from. It is day, and then it’s night, and then it’s day again. And you don’t remember which was first. You walk.”
The next text describes the situation in the USA at the time of the Great Depression. Read it and translate the word combinations in italics: