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What were the causes of the Wall Street Crash

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Introduction

What were the causes of the Wall Street Crash? The Wall Street Crash was caused by both long and short term causes which led to the crash and maybe the day of the biggest financial loss ever. The huge bust in the market started as people were speculating that shares would go up and they would make huge profits. However it got to a stage where companies were over producing and started having to sell at lower prices meaning less profits and less economical growth, when experts realised that companies weren't doing that well and the market was going to crash. All together there were five key factors leading to the bust. The first factor was Overproduction in the American Industry. With the invention of machinery the companies were able to produce more at the same rate, also they produced a lot of household consumer goods such as fridges. These items firstly didn't come cheap and cost quite a lot of money so the poor couldn't afford them and also the fact that households didn't need more than 1 or 2 of these goods so all the excessive amounts produced were unable to sell. ...read more.

Middle

New immigrants, who just came into America to live the "American Dream", were used as cheap labourers as they were prepared to do anything to get a job. The Black community were also discriminated against in America as they were seen as non-whites meaning they don't deserve the same rights as the whites, many lived in poverty, they were given very low paid jobs and many of them were given to ladies who used to work in rich class white people's houses as servants and a majority of males were tenants on farms, meaning they had to pay their landlords money in the form of goods produced, meaning they didn't have much left and didn't make much money. As a result of the overproduction and poor people companies tried selling their goods in other countries however, their was a restricted market for US goods in other countries, so all the money they would be able to make was in the US of which they couldn't make due to the huge amounts they produced which wasn't needed. ...read more.

Conclusion

realised the danger and started selling following what the top investors were doing, then nobody was prepared to buy the shares which were sold so the prices started falling and falling very heavily and on the last day alone over 16million shares were sold and this time the banks were unable to save it, meaning people lost lots and lots of money, the poor became poorer, and many big investors lost a huge amounts of their assets. Many companies went bust as a result. In conclusion I think that all these factors led to the bust, but most importantly I believe that the overproduction was the main factor, as that caused the prices to drop as the amounts produced weren't needed, which meant companies had to sack people meaning more unemployed and without money, and therefore with companies making less profits, it affected the economy and also the company's value would go down meaning their value on the stock market would also fall. If it wasn't for the overproduction the prices wouldn't have dropped at this rate on the stock market. Chittal Patel 10P ...read more.

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