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BEST IELTS Academic Reading Test 232
IELTS ACADEMIC READING TEST 232 – PASSAGE – 2
IELTS ACADEMIC READING TEST – 232
READING PASSAGE – 2
The Wall Street Crash
How did it happen?
A. It was Thursday October 24, 1929. A small street in Lower Manhattan was crowded with people outside the New York Stock Exchange building, waiting for it to open. The atmosphere was heavy with fear and concern. The financial market had dropped like a stone in the final hour of the previous day’s trading, with millions of shares sold off in a hurricane of chaos before the bell rang to close for the day.
B. The visible panic on Wall Street the next morning was justified. The market continued on a downward spiral for the next six days. The next Monday saw it fall 12.8 per cent in value, which was followed the next day, now known as Black Tuesday, with a further 12 per cent drop. The crowd that had been waiting outside on the previous Thursday were now feeling helpless in the face of financial ruin. Businesses collapsed, personal fortunes were lost and no one in the country would escape what would happen over the following months and years to come.
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C. People had not been ready for this massive collapse. In the years that had followed the end of the First World War, business had been booming. Due to its late entry into the war, the USA was left relatively unscathed compared to the European nations. The 1920s had been good to Americans, and there was no reason to imagine that this time of prosperity and optimism would come to an end.
D. In the decade before the crash, what was known as the roaring twenties, the heroes of the nation were bankers and industrialists because of the enormous wealth they had accumulated for themselves and investors. The average American now wanted the same opportunities. Charles Mitchell, Chairman of the National City Bank (now Citibank) believed he had a way of making that dream a reality. He was inspired by the success of liberty bonds, which were issued to the public during the war as a way of financing it. Not only did they earn a high interest rate, but these bonds were also a way for Americans to show their patriotism. The bonds had government protection though, and they gave people the impression that putting savings into insecure stocks and shares on the financial market made a great deal of sense.
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E. Mitchell convinced millions of Americans to invest their savings at his bank’s branches throughout the country. It seemed a solid investment, and people who had never invested in stocks before listened to the advice of his bank. And for 10 years it worked, shares in established companies were doubling their value every 18 months. Confidence in this expanding bubble grew, and no one seemed to see the dark clouds gathering on the horizon. The average American was now buying stock ‘on margin’, meaning that most investments were financed by brokers. It is thought that perhaps 90 per cent of investments in the stock market were loans. If the market were to fall for any reason, most investments would be at risk. It was nothing more than a house of cards.
F. The month before the crash of 1929, prices had dropped a little. It did not create any alarm at the time. Experts had viewed the strong market relaxing a little as a positive and some investors took advantage of the lower prices. In previous years a small drop like this had quickly recovered its position. But those six days in October were almost fatal for the whole US economy and destroyed the finances of millions of Americans. Companies found it difficult to trade, as credit became tight and belief in the banking system had been shattered. With this lack of secure funds, industry found it difficult to operate and pay wages. As an example of the slowdown in manufacturing, within three years of the crash the production of motor vehicles had dropped by 75 per cent. Massive unemployment followed – six months after the crash it had doubled and left 3.25 million jobless.
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G. It was not only urban populations that suffered. A terrible drought in the central states combined with a lack of bank credit meant thousands of landowners as well as their employees had to walk off their land in search of work in California or go north to the industrial cities. People who had lost their homes were living in shanty towns or took to the road begging for food as they travelled. It was an enormous social tragedy. The Wall Street Crash had not necessarily caused the Great Depression, but it certainly become the symbol of its starting point. It was like someone dropping a plate that already had a crack in it – the economy had underlying weaknesses to begin with. The US economy did not improve until the beginning of the Second World War, which renewed demand for goods and services once more.
Questions 14-20
Reading Passage 2 has seven paragraphs, A-G.
Choose the correct heading for each paragraph from the list of headings below.
Write the correct number, i-ix, in boxes 14-20 on your answer sheet.
14. Paragraph A
15. Paragraph B
16. Paragraph C
17. Paragraph D
18. Paragraph E
19. Paragraph F
20. Paragraph G
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List of headings
i. Stocks tumbled further
ii. Too much lending
iii. Banks rescue the nation
iv. A thriving economy
v. Only the wealthy were unharmed
vi. A desire to be part of the prosperity
vii. The long road to recovery
viii. A chain of events
ix. Awaiting the verdict
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Questions 21-26
Choose NO MORE THAN TWO WORDS from the passage for each answer.
The Wall Street Crash
• Wall Street is the place in New York where the (21)………. is housed.
• The crash that occurred there in October 1929 was devastating for the US economy.
• Unlike (22)………. countries after the war, the USA had prospered in the 1920s.
• Encouraged by the wartime popularity of (23)………. the National City Bank advised people to invest in the stock market.
• The market became vulnerable when people took the (24)………. of investing with money they had borrowed.
• When the crash came, many people lost their jobs because companies were unable to pay (25)……….
• It was also a time of (26)………. in the middle of the country, and many people could not afford to stay on their farms.
• The USA did not recover from the effects of the crash until the beginning of the Second World War.
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ANSWERS ARE BELOW
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ANSWERS
14-ix
15-i
16-iv
17-vi
18-ii
19-viii
20-vii
21-STOCK EXCHANGE
22-EUROPEAN
23-LIBERTY BONDS
24-RISK
25-WAGES
26-DROUGHT
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