Causes of the Wall Street Crash Flashcards
Why did crop prices fall?
Overproduction
Why did demand in factories begin to fall?
It was difficult for unemployed farmers to get jobs so a huge number of people couldn’t buy consumer goods
When did the building industry start failing?
1926
What industries were in trouble in the 1920s?
Farming, coal, textiles and iron
What did the production line cause an increase in? Demand for what was struggling to keep up?
Production
Buying expensive cars and consumer goods
What caused a fall in share prices?
By the end of the 20s, many firms were struggling to sell the goods they made
Why couldn’t American companies sell abroad in Europe?
They had put up tariffs in response to American tariffs and Europeans wouldn’t pay for expensive American imports
What attitude meant that wages remained low so workers couldn’t afford goods?
Laissez faire
Most Americans earned less than how much?
$2,000 per year
What % of the population had such low wages that they couldn’t afford to buy consumer goods?
60%
What % of the country owned 33% of the wealth?
5%
By when did shares cost more than they were worth?
October 1929
What kept rising?
Share values
What did some investors do when companies didn’t make much money?
Sell their shares and take the profits
What did the selling of shares when companies stopped making as much money cause?
A fall in prices so more people tried to sell their shares
Why did people lose all their money when they tried to sell all their shares?
The only buyers wouldn’t pay much
How much did banks lend to people to buy shares in 1929?
$9 billion
In 1929, how many people were gambling on shares?
20 million
What was buying on margin?
Investors could pay 10% of price of shares while the bank would lend 90%
How would the money lent by banks be paid back?
Share profits
Why were banks using investors’ money?
People borrowed to buy shares
What was the Petticoat Line?
50% of shares in the Pennsylvania Railroad were owned by women
Why couldn’t people pay the money of their shares back to the bank?
The prices of their shares fell
On Monday 21st October what happened due to there being so much trading?
The ticker which tells people changes in share price fell behind by 90 mins
When was the busiest trading day?
Thursday 24th October
When did banks intervene to buy stocks?
Thursday 24th October
What happened when banks intervened?
Confidence returned, prices stabilised
When was it made clear that banks had stopped supporting share prices?
Monday 28th October
When was the massive stock fall when people sold for whatever price they could get?
Tuesday 29th October
