Even during the boom years 60% of Americans lived below the poverty line which meant they could not buy consumer goods.
Senate Committee set up to investigate the Great Crash found that there was a corruption and 'insider-trading' between the banks and stock brokers.
European countries had put high tariffs on US goods because of the Fordney McCumber Tariff
Factories had overproduced goods and could not find buyers in the USA or abroad for high cost items like cars and fridges.
Easy credit meant that banks loaned money to people who could not afford to repay the loans after the crash - American speculators borrowed $9bn for speculating in 1929
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short-term causes
Roger Babson suggested there would be a stock march crash in March and September 1929, this affected confidence in the stock market.
On Thursday 24th October 1929, nearly 13 million shares were sold in a panic, and prices crashed.
Speculators panicked at the thought of being stuck with huge loans and worthless shares. On Tuesday 29th October the market slumped again, when 16 million shares were sold.
Between 1925 and 1929 the total value of the New York Stock Exchange increased from $27 billion to $87 billion, this did not match businesses which had started to go into decline in 1928.
October 24th became known as Black Thursday.
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consequences
Shanty towns nicknamed ‘Hoovervilles’ (after President Hoover) sprang up in what had been city parks.
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