Cause and consequences of the Wall Street Crash 1929-33


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  • Causes and consequences of the Wall Street Crash
    • WEAKNESSES IN THE US ECONOMY
      • some major industries did not grow in the 1920s e.g coal and textiles
      • farmers had produced too much food for the demand and the prices were low
      • African Americans did not benefit from the boom and suffered from discrimination, getting the worst jobs
      • some industries struggled to compete with foreign industries
      • other industries could not export goods because other countries had tariffs in response to America's tariffs
    • SHORT-TERM CAUSES OF THE CRASH (shares)
      • many people bought and sold shares to make quick profits instead of keeping the money invested in the same business for some time. They were spectators, not investors
      • companies were forced by shareholders to pay out profits to shareholders rather than reinvesting the profits
      • Americans used credit to buy shares. The money wasn't actually theirs it was borrowed
      • These kind of share dealings depended on the confidence that share prices would continue to rise. Once Americans started to worry about the long-term problems in the economy. In September 1929, the prices of shares were decreasing, slowly at first. People began to realise the shares they owned were less value then the loan they had to buy them. All of a sudden, everyone desperately tried to get rid of their shares; selling them for less and less. The worst day was 'black tuesday', 29 October 1929, share prices collapsed
        • Americans used credit to buy shares. The money wasn't actually theirs it was borrowed
        • many people bought and sold shares to make quick profits instead of keeping the money invested in the same business for some time. They were spectators, not investors
        • companies were forced by shareholders to pay out profits to shareholders rather than reinvesting the profits
    • THE IMMEDIATE EFFECTS (they were disastrous)
      • many individuals were bankrupt, their shares were worthless. They also were unable to pay back their credit loans.
      • people lost their homes because they were unable to pay the mortgage
      • banks collapsed, so even people that saved their money lost it.
      • the confidence of the American people was destroyed. Many people became unemployed, and those that had work had reduced hours and reduced wages. People also stopped spending.
      • Big institutions also suffered. About 11000 banks stopped trading. Demand for goods fell; as a result; production fell, wages fell and jobs fell.
        • the confidence of the American people was destroyed. Many people became unemployed, and those that had work had reduced hours and reduced wages. People also stopped spending.

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