History GCSE -Boom to Bust 1920's USA
Mindmap showing all the causes of the Wall Street Crash
- Created by: Natalie Barnard
- Created on: 09-06-13 15:28
View mindmap
- From BOOM to BUST
- Underlying problems of the US economy included:-
- FALSE ECONOMY
- Effects of the Tariff Policy
- US industry could not sell abroad because other countries had put up tariffs in retaliation to he USA
- Surplus goods could not be sold overseas due to the Fordney-McCumber Tariffs preventing imports
- Over-production
- meant prices of products fell and therefore profits fell too
- Most goods had already been bought - the industry was running out of customers
- More was being made than could be consumed
- demand for consumer items fell (people already had them)
- meant prices of products fell and therefore profits fell too
- demand for consumer items fell (people already had them)
- More was being made than could be consumed
- More was being made than could be consumed
- demand for consumer items fell (people already had them)
- demand for consumer items fell (people already had them)
- Over-production
- A lot of countries owed America large amounts of money from war loads - and so american goods not sold easily overseas
- People took to buying shares on credit hoping to sell for profit - but this money isn't real!!
- Speculators caused rise in share prices. Some people borrowed money to buy shares;
- Other bought 'on the margin' (only paying 10% of the value, hoping to pay the rest off later)
- These small investors would not be able to pay back loans to the bank if the prices fell
- In 1928, small investors panicked as they saw s fall in share prices and rushed to sell their own shares
- This led to complete collapse of stock market and thousands of investors lost millions of dollars!
- This then led to the Wall Street Crash - October 1929 - selling shares frantically - banks ran out of money. Businesses collapsed, people ruined
- This led to complete collapse of stock market and thousands of investors lost millions of dollars!
- In 1928, small investors panicked as they saw s fall in share prices and rushed to sell their own shares
- These small investors would not be able to pay back loans to the bank if the prices fell
- Other bought 'on the margin' (only paying 10% of the value, hoping to pay the rest off later)
- Over-confidence in companies meant buying more shares
- Speculators caused rise in share prices. Some people borrowed money to buy shares;
- Over-production
- Most goods had already been bought - the industry was running out of customers
- Most goods had already been bought - the industry was running out of customers
- Republican policies
- Laissez-faire: no intervening with businesses, therefore there were no government credit controls
- Banks lent out money without checking people's incomes, mortgages - (would they be able to pay it back?)
- Laissez-faire: no intervening with businesses, therefore there were no government credit controls
- Unequal Distribution of Wealth
- 60% of families lived below the poverty lines
- Weren't enough people to afford these consumer goods
- 60% of families lived below the poverty lines
- Hire purchase convinced people they had the money to buy goods
- Underlying problems of the US economy included:-
Comments
No comments have yet been made