The Wall Street Crash 29 th October 1929 LO: Understand the timeline of the WSC. Understand the factors that led to the Wall Street Crash. 13 June, 2016

WSC Timeline  June Factory output starts declining. Steel production starts declining  3 rd Sept The hottest day of the year. The last day of rising prices.  5 th Sept ‘The Babson Break’: Roger Babson, economic forecaster, says ‘Sooner or later a crash is coming and it may be terrific.’ Share prices drop 10 points  6 th Sept Market recovers  Mon 21 st Oct Busy trading. Much selling. So much trading that the ‘ticker’ machine which tells people of changes in prices fall behind 1 ½ hours. Some people don’t know they are ruined until the market closes. By then it is too late to do anything about it.  Thur 24 th Oct Busiest trading yet. Big falls. Banks buy stock. Confidence returns. Prices stabilise.  Mon 28 th Oct Massive fall. Market loses 43 points. It is clear that the banks have stopped supporting the share prices.  Tue 29 th Oct Massive fall. People sell for whatever they can get.

Causes of the Wall Street Crash Task: Complete a diagram to record the major causes of the Wall Street Crash. The Presentation is to help your understanding, you will be able to use information from the textbook and a guidance sheet to help you with the diagram. Task: Complete a diagram to record the major causes of the Wall Street Crash. The Presentation is to help your understanding, you will be able to use information from the textbook and a guidance sheet to help you with the diagram.

Causes of the Wall Street Crash Poor distribution of income between rich and poor.Poor distribution of income between rich and poor. Overproduction by American Industries. No export market for US goods Speculation Poor distribution of income between rich and poor.Poor distribution of income between rich and poor. Overproduction by American Industries. No export market for US goods Speculation

Poor distribution of income between rich and poor Almost 50% of American families had an income of less that $2000 a year ( a level which purchased the bare necessities only - think farmers, immigrants, black and workers in old industries). The richest 5% of the population earned 33% of all the money earned in the USA. This meant: Only a relatively small number of Americans could really afford the goods being manufactured. Many bought goods through Hire Purchase (HP). They purchased goods through loans where they did not own the goods until the loan was paid off By the late 1920s there were not enough people willing or able to buy the volume of goods being produced. Almost 50% of American families had an income of less that $2000 a year ( a level which purchased the bare necessities only - think farmers, immigrants, black and workers in old industries). The richest 5% of the population earned 33% of all the money earned in the USA. This meant: Only a relatively small number of Americans could really afford the goods being manufactured. Many bought goods through Hire Purchase (HP). They purchased goods through loans where they did not own the goods until the loan was paid off By the late 1920s there were not enough people willing or able to buy the volume of goods being produced.

Overproduction by American Industries. By the late 1920s more goods were being made than there were people who could afford to buy them. The markets were saturated with goods so as a result, companies: Decreased their prices Made smaller profits Started to sack workers as they were no longer needed By the late 1920s more goods were being made than there were people who could afford to buy them. The markets were saturated with goods so as a result, companies: Decreased their prices Made smaller profits Started to sack workers as they were no longer needed

No export market for US goods In reply to USA’s tariffs against goods from aboard, foreign countries imposed tariffs on American goods. This made it hard for American businesses to sell goods abroad The USA could not export its surpluses (overproduced goods) when demand at home began to fall. In reply to USA’s tariffs against goods from aboard, foreign countries imposed tariffs on American goods. This made it hard for American businesses to sell goods abroad The USA could not export its surpluses (overproduced goods) when demand at home began to fall.

Speculation As the stock market in the 1920s was so strong many people believed that they could ‘get rich’ quickly. They invested in companies and bought shares not because they thought a company was strong but because they thought share prices would rise and they would make money. So many people bought shares that the price of shares rose out of proportion to their real value. In the Autumn of 1929, some experts began to sell shares heavily as they were worried about weaknesses in the economy and high shares prices (they were losing confidence). As a result, small investors panicked and rushed to sell their shares. This led to a complete collapse of prices. As the stock market in the 1920s was so strong many people believed that they could ‘get rich’ quickly. They invested in companies and bought shares not because they thought a company was strong but because they thought share prices would rise and they would make money. So many people bought shares that the price of shares rose out of proportion to their real value. In the Autumn of 1929, some experts began to sell shares heavily as they were worried about weaknesses in the economy and high shares prices (they were losing confidence). As a result, small investors panicked and rushed to sell their shares. This led to a complete collapse of prices.

Task: Prioritising Which factor do you think was the most significant in causing the Wall Street Crash?

How far was speculation the cause of the Wall Street Crash? Introduction: A couple of sentences to show that you know what the crash was and when it was. Paragraph 1: Explain how speculation was the main cause of the crash. Paragraphs 2 – 4: Explain the other causes of the crash Conclusion Explain the ‘how far’ bit. That speculation was an important cause (clarify briefly why) but that there were a range of other causes that contributed as well.