Bitesize has changed! We're updating subjects as fast as we can. Visit our new site to find Bitesize guides and clips - and tell us what you think!
Print

History

The Wall Street Crash and Depression

Causes of the Depression

  1. As early as 1926, there were signs that the boom was under threat - this was seen in the collapse of land prices in Florida.
  2. Eventually, there were too many goods being made and not enough people to buy them.
  3. Farmers had produced too much food in the 1920s, so prices for their produce became steadily lower.
  4. 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.
  5. 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.
  6. The Wall Street Crash of October 1929 was a massive psychological blow.
  7. 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.
  8. The collapse of European banks caused a general world financial crisis.
Crowds outside a closed bank

People outside a closed bank during the Depression

Back to USA 1919 - 1941 index

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.