• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

To what extent was the loss in confidence the main cause of the Wall Street crash?

Extracts from this document...

Introduction

´╗┐To what extent was the loss in confidence the main cause of the Wall Street crash? The Wall Street crash of October 1929 was a product of a many things; it is difficult to put sole blame on factors like "loss of confidence" as this loss of confidence seems like a product of other factors, contributing to the Wall Street crash. Initially it could be argued that the crash was triggered by the nature of the Bull market, which included the aspect of Instability in the market, with a combination of the banking system and government control. These seem to be major factors in the crash; the loss of confidence could be seen as a result of these aspects. The stability of the market was inconsistent and instable therefore it was bound to collapse due to its own nature. It was accustomed to large amounts of buying and selling, which is why it was referred to as the ?bull market?. Brokers had spoken of breaking the ceiling of five million transactions in one day. However, this seemed to be an underestimation. On the 28th November 1928, seven million transactions took place, of course a rise from the estimated five million. ...read more.

Middle

This was the government control over the systems. For instance, the great bull market was under the policy of ?laissez-faire? meaning the government had no effective control over its activities. The Federal Reserve board could raise the rediscount rate in order to discourage further borrowing; however, the board reduced the rediscount rate from four per cent to 3.5 per cent in 1927. This of course encouraged the bull market, a factor in the crash. In December 1928 however, it finally raised the rediscount rate to five per cent, yet this had little effect on the market running out of control, therefore it was a decision made too late. The Federal Reserve board was in fact quite powerless at this stage as the proposal to raise the rediscount rate to six per cent had been over ruled by the New York reserve bank as there were plenty of takers at twice that level of interest. Eventually in August 1929 the rediscount rate had been raised to six per cent, ironically the board was worried that if the rediscount rate was increased too much, a crash might result. The higher interest rates would not be a satisfactory option for bankers albeit in the interest of the country to control credit through these high interest rates. ...read more.

Conclusion

This could be argued as a final push to the crash of the Wall Street. People started to panic after hearing rumours; they began questioning the market thus resulting in a fear of collapse. Overall, the idea that the loss of confidence in the stock market caused the Wall Street crash is only true to a minimum extent. The build-up and instability of the bull market is presented as the main reason. To start with the stock market was a product of extreme confidence, making it vulnerable in itself to begin with. The loss of confidence was a factor of the stock market being at such a high, as it meant people had more to fear, the idea that the ?higher you are the further you fall? seems to fit in line, as the confidence shattered once people realised just how prone to a collapse they could be, seeing the British enterprise collapse made them fear their own Bull market. The main cause of the crash was the great bull market and lack of government control to keep credit in check, which led to loss of confidence, the loss of confidence is not a sole cause, it is in fact a product of other factors. By Georgia Markou ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level History of the USA, 1840-1968 section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level History of the USA, 1840-1968 essays

  1. How far do you agree with the view that the Wall Street crash was ...

    strength were instead traits which were leading to the economic downfall of the Wall Street Crash. The Bull Market is a contributing factor of the Wall Street Crash that led to triggering the Great Depression. Between 1924-1929 stock price increased greatly.

  2. To what extent was Hitler's foreign policy consistent and planned?

    Marching into the demilitarised Rhineland does appear consistent with Hitler's initial foreign policy aims in as far as his desire for more living space for Germans, though Hitler himself admits he wasn't prepared. 'I had no army worth mentioning....if the French had taken any action we would have been easily

  1. Revision notes - the USA 1945 to 1980

    Through this program, Americans volunteered to help underdeveloped nations in areas such as education, farming, health care and construction. Kennedy often said that America was on the verge of a "new frontier" and that the 60's would see a period of rapid change and improvement in Civil Rights, Education, and Scientific progress.

  2. How far do you agree with the view that the Wall Street crash was ...

    As a result millions of Americans cut back on spending and new debts which caused a massive contraction in the economy as a whole, as Aggregate demand dwindled. It is certainly clear that poor health of American agriculture, which had been suffering through the 1920s and did not share in

  1. GOVERNMENT POLICY WAS THE KEY CAUSE OF THE WALL STREET CRASH. HOW FAR ...

    With as many as 60,000 people involved in buying on the margin (or 10% of American families), and millions more buying now, paying later, the cycle of prosperity and stock market investment was actually based on debt and credit. Secondly, the government encouraged the Bull market by publically rejecting critics who warned of danger signs in the economy.

  2. Reasons for the Wall Street Crash of 1929.

    Another reason for the crash was a lack of government intervention; the Republican policies of laissez-faire economics left the American economy to its own devices, therefore the market was not handles in a thoroughly sustainable way. The feeling of prosperity and confidence in a rising market drowned out the few warning voices that the economy was "overheating".

  1. Evaluate the view that overproduction of goods was the most important reason for the ...

    possible that less people would have been working on farm and less surplus food wood have been produced, which would not have caused as much economic problems. Although overproduction of food as well as other goods contributed to the collapse of the economy in 1929, it was not the most

  2. Eleanor Roosevelt.

    Eleanor walked into the tent city all alone to talk to them. She told them of her volunteer work during World War I and promised to do whatever she could to help them. The unemployed veterans cheered as she left.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work