The American stock market, where shares are bought and sold, is on Wall Street, in New York. In 1928, share prices were still going up. Most people were still confident about the economy. President Hoover told the Americans that poverty would soon be wiped out. However, during the summer of 1929, company profits began to fall although share prices were still going up. This was because people were still buying shares, expecting prices to go on rising. However, it could not last. Once people took notice of the falling profits of the companies, panic took over, and the collapse of the economy happened - The Wall Street Crash.
One of the causes of the Wall Street Crash began throughout the 1920's. During the 1920's there was much inequality in the USA. The distribution of wealth was not even and so although many people were rich, more than half of the people in the United States were very poor. There was a big gap between rich and poor. No matter how easy it was to buy goods, - hire purchase - the poor simply could not afford to buy many of them. Therefore, goods were sold mainly to the rich and middle classes. By 1929 these who could afford consumer goods had already bought them. Since American industry was churning out more goods than it could sell, there was overproduction. With this, profits fell and share prices were also bound to fall. Another cause for the Wall Street Crash was that there was no export market for American goods. The government had put tariffs on foreign goods. Other countries did the same to the USA. They wanted to protect their very own market. This made American goods expensive abroad. It was also hard to sell to other countries because they had not had an economic boom. They could not afford American goods.
A vital cause to the Wall Street Crash was the over-confidence and panic that took over speculators and most of the American population. Speculators used the stock market as a form of gambling.
