Wall Street Crash Flashcards
Causes of the WSC
Too much speculation on the market
Farmers had overproduced
Collapse of European banks
Too many small banks that did not have enough funds to cope
Too many goods being made and not enough people to buy them
Social effects of WSC?
- Unemployment - 13mil people out of work
- Starvations - estimated 110 people died
- House building fell by 80% by 1929 and 1931
Economic effects of WSC?
- Entire banking system was on the brink of collapsing
- From 1929 to 1932, 5,000 banks went out of business
Why did voters prefer FDR?
FDR created an impression of great energy and compassion.
Even the middle classes realised he was possibly the only man who could save the USA from revolution.
How did overproduction cause the crash?
Mass production has caused the us economy to make too many consumer goods and automobiles; by 1928 many of those who could afford these foods had bought them and companies found that demand was reducing
How did uneven distribution of wealth cause the crash?
1929 33% of wealth was owned by 5% of the population and over 60% lived below the poverty line so could not afford consumer goods
How did speculation cause the crash?
The number of investors grew rapidly in the 1920s and high demand meant prices rose which did not always reflect the actual performance of the company
Eventually investors realised that share prices were too high and panic set in leading many to sell their shares
How did lack of export market cause the crash?
Over production would have been sold if the US could have exported its surplus goods; however US tariffs in the 1920s caused other countries to set up tarrifs in retaliation meaning the US found it hard to export goods
What happened on the 28th October 1929?
Over 16 million shares were sold and thousands of investors were bankrupt as $10 billion was lost
Prices fell and in 1932 prices were worth 20% original value
