Why US stock market collapsed 1929

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  • Why US stock exchange collapsed in 1929.
    • LONG-TERM
      • Overproduction of agriculture and consumer goods, market was saturated.
        • Laissez faire attitudes under Harding and Coolidge meant little regulation that would prevent the stock market boom going 'over the top'
      • Nature of the Bull Market.
        • Lack of credit control meant investors were encouraged to speculate and rely on share prices continuing to rise.
          • What comes up, must come down!!!
        • Buying of stocks and shares went out of control and value was far higher than real worth of economy
        • Buying shares 'on the margin'.
      • Lowering of US interest rates led to an increase of speculation, in order to strengthen British Sterling and the plan to return it to Gold Standard.
    • SHORT-TERM
      • Boom of 1920's seemed unstoppable, strong confidence in share prices.
        • September 1929 prices began to edge down.
          • Soon people started to realise shares owned are worth less than what they bought them for.
            • Everyone started worrying and tried to sell their shares for less and less.
              • Black Tuesday 29th October 1929, share prices collapsed.

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