There are three types of causes, which help to explain why the Wall Street occurred and they are Long-term causes, Short term causes and Main causes (trigger).
The long-term causes were the division in society and the gulf between the Rich and Poor, the policy of trade by the Republican government and the fact that the Europeans had to pay back war loans, and as a result were unable to buy the surplus goods. 60% of families who were the majority of the population of America could not afford consumer goods. Many who did buy consumer goods bought on Hire Purchase. The richest soon owned all the consumer goods they wanted. Retaliation tariffs restricted trade to ensure the Americans only bought American products to reduce competition.
The short-term causes were that the agriculture was simply too successful and began to over produce. As result of this the prices plummeted and the farmers entered depression. Since there was no market set up for the surplus goods, no one could buy it and on top of that the 60% of the poor could not afford the goods. By 1929 the US industry was running out of customers. Everyone who wanted a fridge and freezer now had one. Due to overproduction there was a growing surplus of manufactured goods. Many people who worked for the car industry were made redundant, as there was a less demand for cars like the model T ford.
The trigger was speculation and also that people lost confidence and began a panic selling of shares, which resulted in prices plummeting and the American stock market collapsed. As US industry boomed, company shares went up. Millions of people were encouraged to buy shares, based on confidence that prices would continue to rise. Many speculators bought shares on the margin (only paying 10%, paying full price from profits). By 1929, investors realised that a crisis was looming near and sold their shares. This led to a loss in confidence, which was the main thing that had kept shares rising! Confidence plunged dramatically and no one would buy shares. Investors began panic selling their shares, leading to tumbling prices. On 24 Oct, 13 million shares were sold. On 29 Oct, 16 million were sold! Banks sold their shares to cover losses made by bankrupt speculators.
In conclusion the government could have stopped the Wall Street Crash only if they had seen the crash coming. They could have changed their trade policy in order to sell off their surplus goods or even regulated the banks. If only the government had seen this coming then perhaps the Wall Street Crash would never have occurred.
