History GCSE AQA Unit 3 - The Roaring 20s (3.3)

Why did the US Stock Exchange collapse in 1929?

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The Wall Street Crash

  • October 1929
  • Herbert Hoover (republican), became President in 1929 March, the economy was still booming
  • Hoover promised this would continue, used slogan "A chicken in every pot" and said the USA were close to having no poverty
  • In six months the situation was completely different
  • June 1929, overproduction made industries cut back
  • September, some investors began to worry about prices and foreseen the crash
  • Led to people selling their shares, but in september the stock market recovered
  • Banks helped restore stability by buying vast numbers of shares
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Share Prices Plummeted

  • Late October, panic set
  • 24th October, 13 million shares were sold on the Wall Street Stock Exchange in New York
  • The banks could not intervene by buying on this huge scale
  • Prices plummeted (of the shares)
  • No one wanted to buy
  • 29th October, investors sold their shares for whatever they could get
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  • Big investors lost heavily
  • Smaller investors were now in debt to the banks; who could repossess their houses
  • Some investors comitted suicide
  • 100,000 companies went bankrupt
  • Many banks went out of business
  • Unemployment rose to 12 million by 1932
  • Homeless built temporary shelters in parks, known as "Hoovervilles"
  • Great depression set in and became worse in 1931-32
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Cycle of depression


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