The Wall Street Crash

Inequalities of wealth

Not all Americans could afford the goods factories produced. There was a limit to the number of cars, radios, telephones and fridges people could buy. American factories were making goods faster than they could sell them

Problems aboard

Companies struggled to sell their goods abroad since foreign governments had put taxes on US goods. These countries wanted to encourage their citizens to buy goods made in their own country

Lack of confidence

Some shareholders began to doubt whether the companies they invested in would keep making large profits. September 1929 : cautious people began to sell their shares, they were worried that they wouldn’t get their portion of company profits

People start to panic

More people began to sell their shares as the message spread about the falling profits of leading US companies. Shareholders realised that their shares were only worth something if someone was willing to buy them. They would drop their price to attract a buyer

“Black Thursday”

24th October 1929 : 13 million shares were sold on the New York Stock Exchange on Wall Street - five times as many as a normal day. Share prices in nearly all companies continued to drop

Beyond “Black Thursday”

People continued tot try sell their shares. 29th October : there was another mad panic to sell shares at any price. 16 million shares were sold during the day and the average price of shares dropped by 40 cents. Shareholders lost a total of $8 billion

Banks go bankrupt

Many Americans had borrowed money from banks to buy shares, hoping to pay back their loans when the shares rose in price. When share prices fell, investors couldn’t sell their shares for enough to be able to pay their bank back in full. When lots of customers couldn’t pay back their loans, the banks went bankrupt. 1929 : 659 banks went bust and some people lost all their bank savings