The Major Causes Of The Wall Street Crash In 1929

717 Words3 Pages
After the economical boom through the 1920s, the USA suffered from scandalous events. The Wall Street Crash in 1929 was due to a damaged and shattered economy. One of the main factors that caused it was speculation. However, it wasn't the only one. Many factors damaged economy along speculation and led to the disastrous crash. Firstly, we are going to develop speculation. The buying of shares became very popular during the 1920s because it was an effortless way to get more money than you had invested without working. Speculators were people who bought shares, waited some time until the price went up, and then sold them again; it was like a sort of gambling. Share's prices go down or up depending on how well economy is doing. On one point…show more content…
Many people couldn't pay back their loans because the prices of the shares they had bought had lowered so they couldn't afford it, or because their businesses had failed due to the lack of buyers. In consequence, banks had to stop lending money to people because if they kept it up and nobody gave the money back, they would have suffered…show more content…
This was caused by the lack of consumers for the overproduced goods, which was partly caused by the distribution of income, and by the loss of the export market, caused by the Republican policies. Industries boomed in the 1920s. They found ways to exploit USA´s vast natural resources and produce more and cheaper goods. However, at some point they had an enormous amount of produced goods and no buyers left. The high classes that could afford to buy these goods had already bought them and the low classes couldn't afford them, even with the high discounts the company made to sell them. Besides, due to the loss of the export market, the industries could only sell inside the US. Prices went down and people still wouldn´t buy the overproduced goods, so companies lost loads of money. If some of this money came from the bank, the owners couldn't afford to pay their loans and the banks lost that money. For example, farmers overproduced goods that nobody bought, and, if they couldn't pay their loans, the bank would take their land away. However, this land still couldn't pay the debt because it was useless, so this was another reason why banks stopped giving

More about The Major Causes Of The Wall Street Crash In 1929

Open Document