The Wall Street Crash and Depression
Causes of the Depression
- As early as 1926, there were signs that the boom was under threat - this was seen in the collapse of land prices in Florida.
- Eventually, there were too many goods being made and not enough people to buy them.
- Farmers had produced too much food in the 1920s, so prices for their produce became steadily lower.
- There were too many small banks - these banks did not have enough funds to cope with the sudden rush to take out savings, which happened in the autumn of 1929.
- Too much speculation on the stock market - the middle class had a lot to lose and they had spent a lot on what amounted to pieces of paper.
- The Wall Street Crash of October 1929 was a massive psychological blow.
- America had lent huge sums of money to European countries. When the stock market collapsed, they suddenly recalled those loans. This had a devastating impact on the European economy.
- The collapse of European banks caused a general world financial crisis.
People outside a closed bank during the Depression
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