Wall Street Crash

Hello! Arguably one of the causes of the Wall Street Crash was overproduction because people started to buy fewer consumer items mostly due to those that could afford them already having what they needed. How could you the idea of less consumer purchasing/overproduction to the actual cause of wall street crash?

Also, how could you link the significant increase in the number of speculators and increase in confidence in the economy during the 'boom' years to the actual crash. I know the information but I'm struggling to actually link it to the cause of the crash.

Thanks!

(edited 7 years ago)

Reply 1

Certified

Original post by daisie

Causes of Wall Street Crash:
Overproduction in consumer goods - companies had goods in excess that were not needed
Overproduction in agriculture - price of grain dropped and overproduction meant lots of wasted food. Only California farmers excelled at this time due to fruit and foreign exports
Speculation on the stock market - people bought shares for the intention of quick profit rather than firm investment. Companies were also pressured to pay out profits rather than re-invest into their business. These speculators were essentially gambling. As share prices dropped slowly, people sold their shares in panic. This lead to worthless shares. The worst day was dubbed 'Black Tuesday' when nearly all shares had dropped in value significantly.
Foreign tariffs - other countries placed taxes on American exports, this was most likely a reaction to American tariffs

Hope that helped.

What exam board are you doing?

Reply 2

daisie

Thank you! Yes it does!
I do edexcel
For those factors what exactly was it about them that caused the crash? E.G. How did having too many goods (overproduction) exactly cause the crash?

Reply 3

Certified

Original post by daisie

Thank you! Yes it does!
I do edexcel
For those factors what exactly was it about them that caused the crash? E.G. How did having too many goods (overproduction) exactly cause the crash?