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Photograph of Wall Street
during the
1929 crash.
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Wall Street Crash Causes Facts: Fast Fact Sheet
Fast, fun facts and Frequently Asked Questions (FAQ's)
about what caused the 1929 Wall Street Crash,
the collapse of U.S. Stock Market on October 29, 1929
(Black Tuesday) .
What caused the Wall Street Crash?
The Wall Street Crash was caused by a
number of factors including:
●
Irrational exuberance, optimism and over
confidence
● US
Economic Boom
●
Rise of American Consumerism
●
Overproduction of consumer goods
● Easy credit
schemes and increased debt
●
The Stock Market boom and the 'Long Bull
Market'
●
Buying stocks
"on margin" (buying shares with loaned money)
●
Unequal distribution of wealth
●
Fall in demand
●
Weaknesses in the banking system
What were the Effects of the Wall Street
Crash? The Effects of the 1929 Wall
Street Crash resulted in the closure of
banks, high levels of unemployment,
bankruptcies, suicides, starvation,
evictions and wage cuts that led to the
Great Depression. The global impact of the
1929 Wall Street Crash resulted in the
world-wide collapse of share values.
Wall
Street Crash
Causes Facts for kids
The following fact
sheet contains interesting facts and information on the Causes of
the Wall Street
Crash.
Facts about
the Causes of the Wall Street Crash for kids
Wall Street
Crash Causes Fact 1: Causes - Over Confidence:
The
Roaring Twenties brought a new, exciting modern
lifestyle to many people in the United States, as
war-weary Americans began to experience prosperity in
the 1920s which led to, over confidence and
optimism. It produced feelings of invincibility and
irrational exuberance - many Americans believed that the
good times would never end.
Wall Street
Crash Causes Fact 2: Causes - The Economic Boom:
The
1920s Economic Boom
was a time of financial prosperity with increases in productivity,
sales and wages. There was a rising demand for
new consumer products leading to massive profits for
American businesses. The vast profits encouraged growth and
led to the economic boom in the 1920s resulting in the rise of Consumerism, easy credit
and an unprecedented increase in stock market
investments.
Wall Street
Crash Causes Fact
3:
Causes - Consumerism:
Consumerism in 1920's America encouraged the acquirement of goods and
services in ever-increasing amounts.
Consumerism increased in America as a result of technical advances and
innovative inventions. Mass advertising via the
newspapers and the new radio industry saw a massive
increase in sales obtained with easy consumer credit.
Refer to
1920's Radio and Advertising.
Wall Street
Crash Causes Fact 4:
Causes - Easy Credit: Americans
desired the new labor saving devices and the new
automobiles that were advertised. There was a movement
away from the traditional values and avoidance of debt
to the concept by buying goods on credit installments.
The once "thrifty and prudent" American adopted
the modern philosophy of "Live now, pay later".
Wall Street
Crash Causes Fact 5: Causes - The Stock Market Boom:
As US industry boomed, so did company shares on the Wall
Street stock market. Prices of shares went up year after
year, and investors made substantial profits. The Long Bull
Market of the 1920's saw stock prices soar from an
average of $50 per share in 1922 to a massive
$350 per share in 1929. Investors were unconcerned about
what companies they were investing in, or whether the
business had good future prospects - they were gambling
that the stock market share prices would continue to
rise. There were virtually no controls on the buying and
selling of shares.
Wall Street
Crash Causes Fact 6: Causes - The 'Long Bull Market': A Bull Market is
a long period of rising stock prices.
The
Long Bull
Market of the 1920s and the
profits being made, encouraged people to
engage in heavy speculation on the
Stock Exchange. Stock Brokers promoted the
idea of "Buying on Margin".
Wall Street
Crash Causes Fact 7: Causes -
"Buying On Margin":
The system of 'Buying on Margin' essentially meant buying
stocks with loaned money. A deposit of $1,000 would buy
and investor $10,000 worth of stocks - the remaining
$9,000 would come as a loan from the stockbroker.
Millions of new investors were 'Buying on Margin' in the
1920s and bid the prices of stock up still further.
Continued...
Facts about
the Causes of the Wall Street Crash for kids
Facts about
the Causes of the Wall Street Crash for kids
The following fact
sheet continues with facts about Facts about the Causes of the
Wall Street Crash.
Facts about
the Causes of the Wall Street Crash for kids
Wall Street
Crash Causes Fact 8: Causes - Overproduction: Businesses and
factories reacted to the increase in demand for the new consumer
goods. Advances in technology, manufacturing machinery and the
adoption of innovative systems such as the
Assembly Line resulted in a soar in output and ultimately in
overproduction of consumer goods.
Wall Street
Crash Causes Fact 9: Causes - Unequal distribution of wealth:
The Unequal distribution of wealth in the 1920's contributed to the
Stock Market Crash. 40% of middle class Americans prospered during
the economic boom. The other 60% of Americans were poor and
struggling to make a living. The majority of the nation's farmers
had suffered a severe overproduction crisis. By the end of the 1920s
the people who had money had purchased the goods they wanted, the
remainder could not afford the new luxury products. The market
quickly dried up, too many products were being produced with too few
people earning enough money to buy them.
Wall Street
Crash Causes Fact 10: Causes - Margin Calls:
When the price of stock fell stock brokers issued
'Margin Calls' to protect the loans. A margin call demanded that
the investor repaid the loan all at once. As stock prices fell
investors had to sell quickly in order to repay their loans.
Wall Street
Crash Causes Fact 11: Causes - Weaknesses in the Banking System:
America had too many small banks and there were virtually no federal
regulations to control banks. Small banks had recklessly invested
their depositor's money on the bull market, buying stocks on margin
with customers’ savings, other banks loaned money to investors. When
the Stock Market crashed small banks lost money, defaulted on their
loans and did not have the assets to respond to the withdrawal
requests of their customers. There runs on banks, small banks begin
to close, others stopped lending money, making less credit available
and the economy fell into recession which led to the
Great Depression.
Facts about
the Causes of the Wall Street Crash for kids
Facts about
the Effects of the Wall Street Crash for kids
The following fact
sheet continues with facts about the Effects of the Wall Street
Crash.
Facts about
the Effects of the Wall Street Crash for kids
Wall Street
Crash Causes & Effects Fact 1:
The Stock Market: The Dow
Jones Industrial Average (DJIA) lost nearly 90% of its
value between 1929 and 1932. It took 23 years for the US
market to recover.
Wall Street
Crash Causes & Effects Fact 2:
Suicides: The number of
suicides jumped to an alarming 18.9 per 100,000 in the
year of the Wall Street crash.
Wall Street
Crash Causes & Effects Fact
3: Psychological effects: The
psychological effects of the crash led to the end of the
feelings of invincibility and exuberance experienced in
the Roaring Twenties and were replaced by feelings of
vulnerability, lethargy, uncertainty and helplessness.
Wall Street
Crash Causes & Effects Fact 4:
Bankruptcies: Over 20,000
companies and business went bankrupt and closed
Wall Street
Crash Causes & Effects Fact 5:
Banks: During the first 2
years following the Wall Street Crash over 3000 banks went
bankrupt - over 10% of the nation's total. Those that survived were far more cautious and
the era of 'easy consumer credit' was over.
Wall Street
Crash Causes & Effects Fact 6:
Fall in Demand: The fall in
demand for consumer products necessitated wage cuts for
businesses to survive and the reduction in labor.
Wall Street
Crash Causes & Effects Fact 7:
Low Productivity: Industrial production
dropped by 45% between 1929 and 1932 contributing to high
unemployment
Wall Street
Crash Causes & Effects Fact 8:
Construction: Construction projects fell
by 80% between 1929 and 1932 contributing to high unemployment.
Wall Street
Crash Causes & Effects Fact 9:
Mass Unemployment: There were
unprecedented levels of unemployment. Over 12 million
people were unemployed with over 12,000 people being
made unemployed every day.
Wall Street
Crash Causes & Effects Fact 10:
Starvation: There was no benefits system
and people were literally starving.
Soup
Kitchens were the only form
of sustenance for many Americans.
Wall Street
Crash Causes & Effects Fact 11:
Evictions: People were unable to pay their
bills, it became impossible to obtain credit, there were
foreclosures and many Americans were evicted from their homes.
Wall Street
Crash Causes & Effects Fact 12:
Overproduction: Overproduction in the
agricultural industry resulted in an excess of wheat production that
contributed to the Dust Bowl of the 1930s. One farmer in 20 were
evicted from their farms.
Wall Street
Crash Causes & Effects Fact 13:
Global impact: The 1929 Wall Street Crash
resulted in the world-wide collapse of share values and economic
recessions.
Wall Street
Crash Causes & Effects Fact 14:
The Great Depression: The 1929 Wall Street
Crash resulted in the Great Depression that caused massive levels of
poverty in America for nearly 10 years.
Facts about
the Effects of the Wall Street Crash for kids
Facts
about Effects and
Causes of the
Wall Street Crash
For visitors interested in the history of
finance in the 1920s refer to the following articles:
Effects and Causes of
the
Wall Street Crash - President Herbert Hoover Video
The article on the
Effects and Causes of the Wall Street Crash provides detailed facts and a summary of one of the important events during his presidential term in office. The following
Herbert Hoover video will
give you additional important facts and dates about the political events experienced by the 31st American President whose presidency spanned from March 4, 1929 to March 4, 1933.
Effects and Causes of the Wall Street
Crash
●
Interesting Facts about the Causes of the Wall Street Crash for kids
●
Summary of the Causes of the Wall Street Crash in US history
●
The Effects and Causes of the 1929 Wall Street Crash
●
Herbert Hoover from March 4, 1929 to March 4, 1933
●
Fast, fun facts about the Effects and Causes of the
Wall Street Crash
● Short Facts on Effects and Causes of
the Wall Street Crash
●
Herbert Hoover Presidency and
the Effects and Causes of the Wall Street Crash for schools,
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