wall street crash

• It can be argued that the economic crisis was caused by the Wall Street Crash.
• In the 1920’s shares values began to rise and people started to take out loans ($8.5 billion worth) so they could invest in the stock market,

  this was known as ‘buying on the margin’ as many people did not physically have the capital themselves.
• Buying on the margin is important in leading to the economic crisis because ordinary people’s ignorance in the market and their belief of a ‘sure-fire profit’ resulted in share prices being inflated and not truly reflecting their true value which would burst at any point.
• However, this cannot be the most important factor is because if banks had not given loans so easily and if the government had regulated the markets then these exploited prices would not have existed

  in the first place and the crash would not have affected so many people.
• In addition, the problems within Wall Street occurred when these shares suddenly began to drop in price and people began to panic, selling their shares to recover some finances - $14 million was lost in a day, this is known as ‘Black Tuesday’.
• ‘Black Tuesday’ is important in leading to the economic crisis because banks and hire purchase companies, who had had also invested, desperately tried to call back their loans and couldn’t this many people’s life savings being lost and companies folded.
• However, this cannot be the most important factor as throughout the 1920s around 42% of the population lived below the poverty line and therefore economic problems within America had occurred for years prior to 1929.
• Overall, some Historians argue that the Wall Street Crash was the most important reason for the economic crisis because it was the event that finally showed the extent of the problems within America

  by causing a financial collapse & massively damaging the economy.
• However, most Historians argue that the Republican policies were the most important factor as their laissez-faire approach which encouraged irresponsible behaviour by creating a false sense of wellbeing by creating large profits in the short term.