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Why did Wall Street Crash in October 1929

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Introduction

Why did Wall Street Crash in October 1929? Wall Street is where a street in New York where the Stock Exchange and important banks are. The value of shares was growing rapidly during 1920s, that it was called a 'Bull Market'. For instance, the price of Radio share used to be $82 on 3rd March 1929, and increased up to $505 on 3rd September 1929. However, on 24 October, now known as 'Black Thursday', what nobody expected happened- Wall Street crashed and the American economy collapsed. The main reason for the Wall Street Crash is said to be people's overconfidence in economy. The people believed that the economy would 'boom' consistently just like how it had been. They did not think it would end sometimes. Because the US economy kept doing well, people thought share prices would also keep increasing without doubts. Therefore there were more share buyers than sellers, and the value of shares rose again. To the Americans it seemed to be an attractive way to get rich, hence a lot of citizens joined the stock market. ...read more.

Middle

They did not think about what would happen when the value of shares started to decrease. However when the price of stocks went down people could not pay the money back to the bank. Banks over-lent the money. Because of all the loans they had were too much, banks had to close down. About 1352 banks collapsed in 1930, and even more in 1931, about 2294 banks. This is how the Wall Street Crash affected even people who were not involved in Stock Market. All the money they saved was gone due to the bankrupt. Also now credits in stores were cut down. Now it became harder to buy goods if you did not have money with you. It obviously made the economy to go worse and worse again. Little government's regulations due to their attitude 'laissez-faire', meaning that the government should interfere as little as possible in people's daily life, were another aspect that caused the Wall Street Crash. Obviously, for the first thing they should have stopped people from speculating. Their attitude led the USA economy to collapse in this degree. ...read more.

Conclusion

In 1925, 32%of the whole income went to the richest 5% while only 10% went to the poorest 42%- and the difference became bigger and bigger. Especially farmers suffered a lot, even during the economic boom and more in 1929. As people demanded less as shown above, they firstly consumed less of the products that they buy the most- food. There was a massive fall in food price as people did not buy it. Farmers could not sell their products as it would not profit them. The best choice for them was to just leave their crops or burn the land. None of selling, such as crops or sheep, was worth selling. Many historians agree that 'overconfidence' was the key ingredient to the Wall Street Crash in October 1929. There was not much change occurred during 1920s- it was just that people believed that the economy was going well, and then they suddenly realised it was not. It brought these horrible phenomena, such as bankrupt. The government policies also caused the Wall Street Crash slowly, although at the beginning of 1920s it was thought to be a good idea. ?? ?? ?? ?? ...read more.

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