October Revolution and 1929 Wall Street Crash: A Historical Analysis
The October Revolution
What began in February as an insurrection against Tsarist absolutism transformed, in just a few months, into the first socialist revolution in the world. Russia transitioned from autocracy to socialism in only seven months. The prestige of the Bolsheviks increased among the working classes, and their membership grew.
Lenin had returned to Russia from exile in Switzerland. Germany facilitated his passage, along with other socialist leaders, because they knew that the pacifist positions of the Bolsheviks could benefit them. Lenin, in his April Theses, summarized his ideas for the future of Russia: immediate peace and the establishment of a government of the Soviets.
The interim government began persecuting the Bolsheviks. Lenin fled to Finland, and several leaders were arrested. During the summer of 1917, the Bolshevik party clearly presented its revolutionary program: an end to the war, distribution of land, nationalization of banking and industry, and workers’ control.
By late summer, General Kornilov attempted a coup to form a new government to ensure order. Prime Minister Kerensky had to muster all revolutionary forces to defeat the insurrection. The support of the Bolsheviks was decisive.
The situation led Lenin to move towards revolutionary action. He returned from exile and convinced the central committee of the opportunity for an armed insurrection to overthrow Kerensky and seize power. The organization of the coup fell to Trotsky. In October 1917, Bolshevik troops occupied Petrograd. Ministers, except for Kerensky who managed to flee, were arrested. Lenin gave the order to the Second Congress of Soviets, which chose him as its president. The Bolshevik revolution had triumphed.
The Crash of the New York Stock Exchange
Since 1925, share prices on the New York Stock Exchange (Wall Street) had been growing, accumulating profits. Everyone invested in a business that seemed to offer enormous benefits and security. The easy availability of finance for buying shares fueled even more speculation.
However, the values of commodities began falling, and the economic difficulties were becoming obvious, dragging the international monetary system into a precarious situation. German industrial production had been stagnant since 1927, and international trade had been in a prolonged state of atony. The NYSE index stagnated.
The authorities, concerned about the situation, decided to raise the price of money, but these measures were too late. On October 24th, a massive sale of shares resulted in a sharp fall in prices. This day was dubbed “Black Thursday,” marking the end of the rising market.
Many investors put their shares up for sale to repay the money they had borrowed, which accentuated the fall on Wall Street. The trigger for the crisis of 1929 was the crash of the NYSE. The index sank within months. The panic that gripped investors launched a massive sale of securities, overwhelming the attempts made by some banks to stem the fall in prices.
The slow recovery began in 1933.