Causes of the Wall St. Crash Flashcards
How many people owned shares in USA in 1929?
20 million ( population 120 million)
What does ‘spectulation’ on the stock market mean?
Investors who didn’t want to keep the shares for long, sell them as soon as they increased in price. Took a loan and ‘bought on the margin’ (10% deposit and loaned the rest)
How much did American banks lend for spectulating in 1929?
$9 billion
Which industries had been in decline or facing troubles in the 1920s in America?
Coal, farming and textile (even the construction industry had started to decline slightly by 1926)
Why were some consumer goods not selling as well as they had done earlier in the 1920s?
Mainly bought by rich, middle classes. They had their product and did not need more, the poorer classes couldn’t afford them.
What is it called when you produce more than you can sell?
Over production
Why was it difficult for US companies to sell surplus goods abroad?
- Europe couldn’t afford American goods
- American tariffs against foreign goods had meant foreign put tariffs on US goods
How much did American business spend on magazine advertising in the hope of encouraging spending?
$3 billion
What did ‘spectulators’ on the stock market start to do when in June 1929 official figures showed a fall in industrial output for the first time?
Started to worry and tried to sell shares before the prices dropped
Why could the differences between the rich and poor in America in the 1920s have led to the Wall St. Crash?
Once rich had the product the poor (vast majority of the population) couldn’t afford to buy products so demand would fall and share prices would drop, leading to the selling of more shares
