The stock market has always been something that interested me. Indeed, I recall when I was about 12-years old playing an online stock simulator by simply buying stocks randomly and see if I ended the day with an unrealized gain or lost or even being strangely and suddenly interested by my history class in high school when we were covering the stock market crash of 1929.
You understand that when my teacher mentioned the word ‘Stock Market’ during his presentation of the novel, I was immediately decided to read, ‘The Razor’s Edge.’ This short article will simply give a brief description of the stock market crash of 1929 so that we all are on the same page. I do also believe that the crash has an influence on the plot of the book covered in this blog.
What is a stock market crash?
We all know that investors fear a potential stock market crash. Even if it seems to be straight forward, some of you might ask yourself this question: What is a stock market crash? It is simple; as per Investopedia.com, a well-known website, it is when the stock market drops rapidly and unexpectedly, meaning that the stock prices drop significantly, creating an unrealized lost for most investors, often explained by the ‘collapse of a long-term speculative bubble,’ like the housing bubble for example (Investopedia). The public starts to panic and sells their position in the stock market all at the same time, causing the crash. It is something scary that can happen at any time.
Stock Market Crash of 1929
The Black Tuesday, the Great Crash, the Wall Street Crash of 1929 are all synonyms for the stock market crash that occurred in 1929, more specifically on October 24, 1929. It is indeed one of the biggest crash that ever happened in the United States’ history (history.com). As we mentioned in the introduction, a stock market crash is often explained by a collapse of long-term speculative bubble. It is the case for the Wall Street Crash of 1929; in fact, most industries have seen profit record that year since everyone was spending and investing their hard-earned money. By 1929, more than 40% of the money borrowed at the bank were invested in the stock market (Content.time.com). People were greedy and always tried to make more money.
It is a few years after this period of growth that the stock market crashed. On October 24, an impressive record of 12,894,650 shares were traded which is a very high volume, epically at that time. During this event, billions of dollars were lost, leaving families and investors homeless (history.com). It was a crazy week for the stock market; the New York Stock Exchange’s board of governors were thinking of perhaps closing the financial market to stop the panic but did not close it finally (Content.time.com). As an indicator to show how drastically the stock market dropped in 1929, the Dow Jones Industrial Average (INDEXDJX) dropped of 13% in one day in 1929 where as on August 25, 2017, the Dow Jones Industrial Average increased of 0.14% (Google finance/Content.time.com)
The Razor’s Edge
As you may have recognized while reading the book, the English writer W. Somerset Maugham does include the important event in his story. In part three for example, once Isabel quit Larry, she became engaged to Gray since he represented for her the American dream; he was simply of wealth and success. Sadly, like most Americans at that time, the stock market crash affected them, explaining why they lost a major part of their fortune. When the crash happened, Elliot was generous towards his friends and family. In fact, he gave a part of his fortune to Gray and offered housing to Isabel.
Now, you might ask yourself this question: Why was Elliot not affected by the crash of 1929 if everyone else was? Well, Elliot was advised from one of his friends who’s well-placed in the church. His friend told him to sell all his position in the stock market because something was about to happen. Now, this might be ‘insider trading’ since he received privileges information that the public did not have at the time. It is the main reason why Elliot is a wealthy man compared to all his surroundings; he sold all his stock before the economic collapse.
I hope this post helped you understand the importance of the stock market in The Razor’s Edge.
If you have any other questions or precision you would like to receive, please do not hesitate to contact me, it will be a pleasure to help you.
Cheers,
Matt
** All pictures were taken from Pixabay **
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