End of Prosperity Flashcards
prosperity
successful, flourishing or thriving condition, especially in financial aspects
long term causes:
overproduction in industry
- 50% of families had an income less than $2000 a year
long term causes:
overproduction in agriculture
- advanced technology
- Europe started growing crops again so demand fell
- thousands of farmers became unemployed
long term causes:
laissez-faire
- Republican government
- shouldn’t intefere
long term causes:
house prices
- property prices increase
- many bought houses to sell later to make a profit
- 1926 house prices fell
- sold for less than they originally paid
long term causes:
credit
- couldn’t afford to pay loans back
- shops went bankrupt
long term causes:
American loans
- WW1, many banks loaned money to Europe
- Europe unable to pay back when needed
long term causes:
small banks
- grew after WW1
- not strong enough to cope
- people who had money in these lost it
long term causes:
fall in trade with Europe
- in response to Fordney-McCumber Tariff Act
- taxes on imported American goods
- less people bought them abroad
short term causes:
over-speculation
- 1920s, loads bought shares: from the shoe shine boy to the president
- buy without doing proper research
- 1928, share prices didn’t rise as much
- 1929, share prices rose lots, people started to speculate again
short term causes:
availability of easy credit
- hire purchase form companies such as Ford
- ‘buying on the margin’
- 1929 people struggled to pay back loans
short term causes:
loss in confidence
- financial experts worried so sold lots of their shares
- lots of small investors started to panic and sell their shares
19th October 1929
- shareholders begin to panic
- 3.5 million shares sold and bought
22nd October 1929
- stock market recovers
- prices slightly recovering
24th October 1929
- prices fell so people rushed to sell shares
- 13 million shares have been traded
