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How far was

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Introduction

How far was speculation responsible for the Wall Street Crash? In the United States of America, in 1928, there was a Presidential Election. Nobody doubted that the Republicans would win again, and this time the Republican candidate was Herbert Hoover, which he did. The US economy was still booming at this period in time and one of Hoover's opening statements was, "We in America are nearer to the final triumph over poverty than every before. The poor man is vanishing from among us." Only six months later, in October 1929 the Wall Street Stock Market crashed, the American economy collapsed and the USA entered a long depression that put an end to the prosperity of the 1920s. There are many reasons for the Wall Street Crash; some say that Hoover and the Republicans should have saw what was to come and taken appropriate action whereas others simply say that there was no way to foresee what was going to happen, and that no one is to blame, however, I believe that the main cause of the Wall Street Crash was speculation and in this essay I am going to explain why. During the economic boom of the 1920s, investing in the stock market was very attractive. ...read more.

Middle

If people were confident that the only way that share prices would go was upwards, then there would be more buyers than sellers. However, this psychological thinking worked in the other direction as well, for if the people believed that the share prices would go down, then suddenly there would be many more sellers and the entire structure would come falling down, in other words, a crash would take place. This is exactly what happened in October 1929. After the boom years, companies started to show signs that they were struggling. The boom was based on the increased sale of consumer goods such as cars or electrical appliances. Due to the mass production techniques adopted by Henry Ford, and then copied by just about every other industry, many of these goods could be sold at affordable prices and made at a very efficient rate. However, the mass production line soon became too efficient and the cause of this was that supply outstripped demand, or in other words, the American industries were producing more of these goods than they could sell, and so factories were full of unsold goods. The market for these goods was mainly the rich and middle class. By 1929, those who could afford consumer goods had bought them and the poorer had not. ...read more.

Conclusion

Nobody could pay back the banks and so they could not regain all the money they had lent to people to buy shares with. Also, people had to sell their houses, as they knew that they would not be able to pay the mortgage. The people now knew that they would not be able topay for anything as business and factories (they places in which they worked) had cut workers to save on money, as they had also lost out in the crash. Millions became homeless, and the nation was in poverty, all due to the speculation of the American people. So to conclude, I believe that speculation was very responsible for the Wall Street crash. If the people understood that there was a possibility of share prices going down as well, then they would not have been so confident in buying so many shares, and it was also this confidence in their speculation that was also a part of the crash. Also, if they had not panicked, and been more understanding like people such as Babson, than they would have known that if they all started selling then supply would outstrip demand and that there would be a collapse of the stock exchange. So, with other factors also included, speculation was the main reason for the Wall Street Crash. ?? ?? ?? ?? 1 GCSE History ...read more.

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