Causes of the Wall Street Crash Flashcards
When was the Wall Street Crash
October 24-29 1929
- 24th was mass selling on Stock Exchange
How many shares were sold in the wall street crash
1,641,030 shares sold
How much money was lost in the Wall Street Crash
$30 billion lost
What was an issue with the stability of employment in the 1920s
Unstable due to the fluctuating demand for goods, with on average 72% of workers unemployed at some stage.
Why were unions unable to help with stability of employment in the 1920’s
Many employers operated by ‘yellow dog’ clause, which banned employees from joining a union
How did Stock-Market Speculation contribute to the Wall Street Crash
Between 1927-9, easy credit led many to use credit to invest in stocks, called buying ‘on the margin’. People bought on speculation and confidence, leading to grossly overvalued shares
What the massive demand for stocks called
The ‘bull market’
Did the bull market work
For a while, as share prices constantly rose. And then it didn’t.
How did the weakness of the banking system contribute to the wall street crash
The system was outdated, with low interest fuelling easy credit. There were 30000 banks in the USA, most were very small so unable to cope with financial problems
How many bankes were in the US in the 1920’s
30,000 banks
What happened if a bank went under
Depositors lost all their savings
How many banks operated outside of the Federal Reserve Board’s regulations
2/3. This meant no controls, no foresight on how loans be repaid
How did Overproduction contribute to the wall street crash
The Boom was dependent on domestic consumption. However there was falling domestic demand, and in the late 20’s production outstripped demand, which flooded the domestic markets. In 1929 stores full of unsold goods stopped ordering. Unemployment grew as firms cut production, which meant they couldn’t buy luxuries
How did the failing construction industry contribute to the wall street crash
In the mid 20’s there was a construction boom, and after 1926 demand began to tail off. This led to a fall in demand for building materials and higher unemployment
How did small businesses suffer towards the end of the 20’s
The decade saw the growth of huge corporations, but smaller ones faced hard times. For every four succeeding businesses, three failed
