End of prosperity

• Over production

  • Unemployment increased and wages fell so demand for goods began to fall.
  • Companies were slow to notice the problem so their warehouses were full of products. - Loss of profit
  • Fewer products being sold meaning less workers needed in a firm so unemployment levels had risen.
• Over-Speculation

  • Investments in 'stocks'
  • Fewer products being sold resulting in a drop in confidence in the market.
  • Fewer people buying shares.
  • 1929, Value of stocks reached 87 billion.
• Falling demand for consumer goods

  • 50% of American families had an income less than $2000 a year which is the minimum needed to survive so were unable to afford consumer goods.
  • However, manufacturers continued to produce goods.
• The boom in land and property values

  • Dramatic rise in value of land and property so more people were purchasing property or land in hope that the value rises over a period of time.
  • 1929, However prices of properties began to fall so they weren't making profit.
  • Warning that the economy was declining
• Availability of easy credits

  • Too many people purchasing on hire purchase.
  • 75% of purchase prices were borrowed.
• Cycle of prosperity

  • Car industry mass produced.
  • Jobs became available in multiple industries.
  • More people with jobs enabling them to afford a car.
  • Once everyone bought a car, the demand dropped resulting in a fall in sales.
• Wall street Crash Timeline

  • 1929, Falling demand meant lower prices and falling share prices.
  • Once investors realised they began to sell shares.
  • As more shares were available to buy, prices of shares went down.
• Main events of the crash

  • Saturday 19th, 3.5 million shares sold however shares weren't being bought. So money going into businesses decreased.
  • "Black Thursday" - 13 million shares sold but no buyers found.
  • Friday 25th - Top bankers decided to support the market by using peoples money to buy stocks and shares in order to stop businesses from going bust.
  • "Black Tuesday" - 16 million shares sold, NO buyers, Investors are ruined.