Wall Street Crash (October 1929)

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Wall Street Crash (October 1929)

Causes

  • Credit - People bought shares with the promise of paying later even though they couldn't actually afford them, causing banks to lose money.
  • Over Production - Shares lost value as the supply of goods began to outweigh the demand
  • Panic Selling - People lost confidence in shares in 1929 and sold them quickly to regain as much money as possible
  • Poverty - 50% of US people lived with an income of less that $2000 per year (blacks, farm workers and old industry workers) and couldn't afford goods
  • Overseas Markets - Foreign markets had recovered after WWI and did not need American goods, causing a drop in demand and value of companies

Effects

  • Bankruptcy - Millions of people lost money on the stock market
  • By 1933, 14 million people became unemployed (up from 1.6 million in 1929)
  • People were evicted from their homes due to debt
  • People lost savings in banks due to the collapse of 11,000 banks between 1929 and 1933
  • Demand for goods continued to decrease, as did production of goods
  • People lived in poverty
  • Farmers lost a lot of land
  • People lost all confidence in the economy

Overall summary

Overall, the Wall Street Crash was caused by many factors, including credit, over production and poverty. It led to many people becoming bankrupt and losing their houses and a large increase in unemployment.

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