The main cause of the Wall Street Essay

Published: 2020-02-01 12:20:21
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I do not agree wholly with that statement. The panic selling of shares was the immediate cause to the Wall Street crash. However, if there had not have been the panic selling of shares then there would not have been such a dramatic slump but a smaller one. America was doing well in the end of the 1920s; the boom had made half the population happy. However, now that all the people who could afford it had brought electrical goods, cars etc there was no one else left to buy the surplus products.

This is called overproduction, this means that there are too many products and the market is saturated, this usually starts off a slump. The companies were then starting to do not as well, this meant a fall in the share prices. The people in the know at the time had sold their shares and then all the other people who had invested in them panicked to sell their own shares causing the Wall Street crash.

In the 1920s the wealth had not been evenly split, blacks, immigrants and farmers were not doing as well, this meant that half the population could not afford to buy the new products being mass-produced causing overproduction to happen quicker, if the wealth had been evenly spread then I do still think that there would have been a crash, however, it would have been a few years later. To increase the boom in the 1920s America put taxes on products coming in from abroad to make it a stronger economic country. The countries in Europe then retaliated and put a tax on all American goods.

This meant that there were a lot of extra products not being sold; this was a part of overproduction. In the stock market a lot of speculators were playing with borrowed money from the bank because they felt that they were confident enough to win it back. Speculators were people who knew nothing about stocks but saw that a company was making profit in shares so they would invest in them if they were confident enough. This meant that companys products were worth a lot more in stock than they were in real life. This meant that at the time of the crash there was a hell of a long way to go down causing many people to go bankrupt.

Because of overproduction many experts in the know decided to sell their shares, other people who owned shares in the same company then started to panic and quickly tried to sell there shares causing the prices of the company to plummet. The panic selling of shares technically was the Wall Street crash. I do not think that the panic selling of shares was the main cause for the Wall Street crash; I think that it was overproduction. Overproduction was always going to happen, it could have been postponed a few years if the wealth in America had been spread evenly or if Europe hadnt put a tax on all American goods.

Even if this had been the case overproduction would have happened sooner or later. Overproduction caused some people to sell their shares that then lead to everyone panicking to sell their shares causing the Wall Street crash. If speculators had not have put in so much money there would not have been such a big slump but there would have been one. The panic selling of the shares was the last thing to happen and probably the most influential thing to happen before the crash. However, the thing that started the crash off was overproduction.

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