End of prosperity

• Factors that led to the end of prosperity in 1929:
• The Wall Street Crash in 1929 led to the sudden end of prosperity
• Overproduction in agriculture:

  • Farmers were producing too much food due to improved techniques and decreased demand from Europe, leading to falling prices and profits
  • Thousands of farmers had to sell their farms
• Overproduction in industry/falling demand for goods:

  • By the end of the 1920s, there were too many unsold consumer goods in the USA
  • Approximately 60% of Americans could not afford to buy cars, refrigerators, etc.
  • The supply exceeded the demand
• Buying on credit:

  • Some poorer people bought goods on credit, resulting in many owing money to shops and companies
  • Companies faced financial difficulties as debtors failed to pay
• Commerce:

  • America tried to sell surplus goods to European countries, but European countries imposed taxes on American goods
  • American goods became too expensive in Europe, leading to decreased trade between America and European countries
• Property prices:

  • House prices increased significantly in the early 1920s but fell after 1926
  • Many Americans ended up owning houses worth less than what they paid for them, leading to negative equity
• Too many small banks:

  • Due to laissez-faire policies, banks were not tightly regulated
  • Many small banks lacked financial resources to handle the rush for money during the Wall Street Crash, resulting in bank closures and loss of customer confidence
• Short term reasons:

  • The Stock Market:
  • Share prices increased unrealistically throughout the 1920s
  • Over 20 million people invested in shares by 1929
  • The value of the stock market tripled from $27 billion in 1925 to $87 billion in 1929
• Overspeculation:

  • Many people bought shares on the margin, borrowing money to buy shares and selling them for profit
  • Approximately 75% of the share purchase price was borrowed in 1929
• Loss of confidence and sudden fall in share prices:

  • The Wall Street Crash resulted in a sudden fall in share prices, leading to loss of confidence in the stock market
• The prosperity of the 1920s came to a sudden end after the Wall Street Crash in 1929
• The Wall Street Crash in 1929 led to the Great Depression of the 1930s
• In September 1929, some investors started selling shares in large numbers, causing panic and a rush to sell shares
• On 24 October 1929, known as Black Thursday, 12.8 million shares were sold, leading to a significant economic downturn
• On 29 October 1929, 16 million shares were sold at very low prices, resulting in the collapse of the Stock Market in New York
• The Roaring Twenties, a period of cultural and economic developments, came to a sudden end after the Wall Street Crash
• Investors lost their money in the Crash, leading to bank closures, loss of savings, and high levels of unemployment
• By the end of 1929, 2.5 million Americans were out of work, marking the beginning of the Great Depression of the 1930s
• The Great Depression was a prolonged economic downturn that affected the whole world
• The Great Depression resulted in people being unable to buy consumer goods, leading to redundancies, wage cuts, and a rise in unemployment
• The Great Depression had a significant impact on the economy and people's livelihoods