WHY DID THE WALL STREET CRASH HAPPEN IN 1929? The Wall Street crash which happened on 29 October 1929 was one of the most depressing events in the history of America. This happened because people lost their wages b 60%, 14 million people were unemployed by 1933, banks went bust and also US trade slipped from $10 billion to $3 billion. The Wall Street crash happened due to some reasons: one reason was, the Americans were buying consumer goods on credit, especially cars and houses they did this because, they didn’t have enough money, and therefore if they get the money they will be able to pay. Another reason was that speculation was rife, because people believed the stock market was easy so 20 million Americans invested but only 1.5 million people had serious knowledge of the market.
Even though the stock market began to recover some of its losses, by the end of 1930, it just was not enough and America truly entered what is called the Great Depression. Throughout the 1930’s over 9,000 banks failed. Bank deposits were uninsured and therefore as banks failed people simply lost their savings. Surviving banks, unsure of the economic situation and concerned for their own survival, stopped being as willing to create new loans. This worsened the situation leading to less and less expenditures.
Three causes of the stock market crash of 1929 were weaknesses in the banking system, over extending credit, and pure negligence. Some of these same weaknesses could be observed prior to the Recession of 2008. Prior to the crash of 1929 and the Recession of 2008, there was a rapid growth in bank credit and loans. In the mid 1920s, consumers’ buying power increased and people began to experiment with different products. In order to buy many of these products, consumers relied heavy on cheap credit to increase their spending power.
The collapse of stock market happened because it had a weak foundation. In fact, it was dependent on borrowed money; banks would lend money to the population to buy shares in the market without making sure the borrowers were able to pay back. Moreover, facing the crisis over nine thousand banks were obliged to close, for they invested their client's savings in the stock market. Going through rough time financially, Americans are drastically forced to reduce their spending which lowered the amount of production; therefore, employers slashed the numbers of employees that caused the unemployment rate to rose from 4.2 in 1928 to 8.7 in 1930 and to 23.6 in 1932. In the middle of the crisis, several social classes experienced a harsh time.
Unit 6 terms & names pt.1 &2 Pr.5 Part 1 • Over production – Making too many products without enough consumers, one of the five causes of the great depression during the 1920’s. • Foreclosure – towards the end of WW1 due to the over production of food many farmers land was foreclosed (the process of taking possession of a mortgaged property) • Buying on credit – as a result of economic problems many Americans used credit to live beyond their means. (buying now and paying later) • Buying on margin – Borrowing money to pay for stocks • Black Tuesday – A day in 1929 when the stock market crashed (lost value) • Great depression – A global economic depression that spread throughout Europe, Asia, and Latin America. • Bank Failures
Now, businesses made more goods then they could sell. So people who had stocks lost all their money. This event was called the Great Depression. Another Roosevelt Becomes President In 1932, people wanted a new president. People voted.
This forced many small businesses to fail because they couldn’t compete. Taxes were raised from two billion dollars/year to thirty-five billion dollars/year. The government’s budget increased from nine billion dollars/year to one hundred billion dollars/year along with a four times increase in government personnel. Half of the goods produced in America during this time were for the war, which created 7 million new jobs. This upswing in the economy brought America out of the Great Depression.
In the old industries (e.g. raw material industries) there was a low demand because of all the new industries introduced in the 20s. Poor wages and the demolishment of trade unions led to them not having disposable income to spend on luxuries. Also, Black people were continued to be discriminated against, and lived in poverty. Trade The US has not been selling the left over products (due to over-production) to other countries around the world.
This is due to de-industrialisation as the regions mining industries have now long gone and they now depend highly on tourism. The flood, in short term affected Boscastle considerably, Shops that survived the impact and bombardment of the water were too flooded to open and had to be repaired. This on average for buildings and houses cost in between £15,000 - £30,000 and the total cost of the flood was £50 million! This caused a big dip in the local economy had to pay out for all the damages without getting much money put in! And also due to the shops closing, the people ended up loosing there jobs.
For example, spending was lessened and investment was dropped. Businesses went through a downward spiral, and unemployment skyrocketed. When The Great Depression reached its climax more than 14 million Americans were unemployed, and many banks closed. The Great Depression brought about emotional anguish and physical suffering to many Americans. Yet, the United States Government was able to be an aid