The crash
There are several causes that explain the Crash of 1929:
- Overproduction. The production increased a lot since Europe imported American goods in WWI.
- Speculation. Profits had been really high between 1921 and 1926.
- Many people bought shares as they could not be invested in industry due to overproduction.
- The price of shares did not match their actual worth.
- Loans were easy to get. Hence, more shares were bought.
Wall Street is the trade center for the USA. By 24th October 1929 prices dropped because everybody wanted to sell their shares but nobody wanted to buy.
They hoped the banks would keep the value of shares up artificially, but they couldn´t because they were short of money (it had been loaned and not repaid)
As a result, most people couldn´t pay their loans, banks collapsed, factories closed and thousands of people were unemployed.
The Republican government didn´t believe the State should interfere in the free market economy to help private businesses, the poor, the unemployed ...
