What were the causes and the consequences of the wall street crash

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What were the causes and the consequences of the Wall Street Crash

In 1928 Herbert Hoover President of the United States 1928-1932 said, “we shall soon, with the help of God be in sight of the day when poverty will be banished from the nation.” This statement was far from the truth as the Wall Street crash which would result in years of depression was just around the corner. This was not predicted as the “Roaring Twenties” had given the US a booming economy. The truth was that there were cracks beginning to form in the foundations of the economy. Then the Wall Street crash occurred and the whole economy collapsed. The Wall Street crash was the catalyst for depression. People lost all their money Possessions lost all value.  

There were many causes of the Wall Street crash and the main reasons were the flaws during the economic advance in the 1920`s. A massive 60% of American families were earning less than $2000 a year. The upper and middle class people that had benefited from the boom in the 1920`s had bought all the goods available. They had all the cars and refrigerators that they needed and the poor could not afford these products so the market became saturated there were more goods being produced than were being sold. They could not export the excess to other countries as the tariffs the Americans had come up with were now being placed on their items as well. This meant that they could not export the excess goods.

 Overproduction caused companies to stop making money and as a result many business men began to speculate that the share prices of companies would begin to fall. This caused everybody who had shares to begin to sell them rapidly. Although the autumn of 1929 had seen the largest amount of share buying the attitude swiftly changed from “buy buy buy” to “sell sell sell”. On Saturday the 19th October 1929 share prises began to fall and  3,488,100 shares exchanged hands then on Monday 21 th October 1929 the market continued to fall as 6,091,879 shares were traded as people began to franticly sell shares. On Tuesday the 22 shares began to raise slightly as Richard Whitney (a broker from J.P Morgan) bought shares to try and boost the peoples confidence in the market and it began to work but its effects were short lived. On Thursday 24 th October 1929 (black Thursday) 12,894,650 shares were traded as people franticly sold. On Tuesday 29 the market crashed. Most of America was now bankrupt, banks had lost everybody’s savings on the market and depression was setting in. People now changed from selling stocks to selling possessions that they had brought in the golden age (1920`s) . New cars and other products were selling for a fraction of the price they were brought for a car was sold for just $100 on the day of the crash. Depression began to settle in as people could no longer buy products companies lost money and had to cut jobs. Sales of all items plummeted, in 1929 car sales were 4.5 million but in 1932 they were just one million. This reduction in sales caused the companies to cut jobs. This unemployment meant that sales plummeted further and so more jobs were cut.

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The road and building construction was cut by 92%. Manufacturing wages fell from 59 cent in 1926 to 44 cent in 1933. So many jobs were lost that thousands of men would apply for a single job. In 1929 just 1.6 million people were unemployed but by 1933 14 million were unemployed. As the unemployment levels rose so did the amount of homeless people. Because people no longer had a source of income they could not pay their mortgages and were forced to sell their properties over to the banks. Around the edge of almost every city large shanty towns ...

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