What is one reason that more people didn’t foresee the economic collapse of the 1930s?
Answers
The share prices which was on upswing had been rising all year and investors had been speculating with borrowed money on the pretext that the uptrend would continue.
The sudden crash on Thursday 24th October led to a drop by 11% which was followed by a 13% fall on Monday and a further 12% on Tuesday. By early November companies which were quoting on the New York stock exchange had lost 90% of their value .
The major reason responsible for the economic collapse in 1930 was that people figured out that there is huge risk involved in terms of purchasing the stocks on loan basis.
During that time, not everyone had knowledge about the stock market, hence it was natural that there is a huge risk involved.
That was one of the causes that lead to economic collapse.