How far was speculation to blame for the Wall Street Crash?
As comments to this post, you will be able to read the essays written by our students in Senior 3. Well done everyone!!
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USA: From BOOM to CRASH.
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A nice piece of contribution. Went through with my student in answering a “B” Question. The how far approach was clear and straight to the point explaining the role of speculation to the crash.Furthermore it explained other causes like unemployment,distribution of income and overproduction. However the conclusion could be more of evaluation and personal viewpoint and maybe how to curb activities of speculation and addressing the issue of income and overproduction. Thank you.
Speculation was partly responsible for the wall street crash. In the following essay i will explain my statement.
Speculation was a very important cause, because many people started to buy and invest in shares as the companies were doing well, but at one point , people would stop buying most of these new products that were on the stock market, and so shares would decrease its price. As everybody speculated, when shares decreased, everybody tried to sell its shares and this caused the crash. During the 1920s everybody speculated. Everybody bought shares, then waited some time and sold them again to get some profit.
Overproduction was another important cause because as this was an industrial revolution , new industries were built, and so there were more products to sell and because of isolationism they didn`t have export market, so the products were sold in the USA, so at one point all this production would turn into overproduction. As many companies were overproducing, they had to lower their prices, so the shares also lowered in terms of prices. Also the farmers suffered overproduction as after the First World War they didn`t had anyone to sell such amount of products and also factories replaced their work, as they did the same type of products or better products but sold them cheaper.
Finally the actions of bank was another cause, as many banks got involved in speculation, they themselves speculated, and they lent money on-margin. This had to do with speculation as well as overproduction, because overproduction made shares decrease in terms of price and banks as they were involved in speculation, they lent huge amounts of money to shareholders to buy shares, so finally they lost all the money invested in shareholders.
In my opinion speculation was the most responsible cause, but without other causes, wall street wouldn`t have crashed.
In 1929 the stock market crashed. In the following essay I will discuss the importance of the different causes that led to the Wall Street Crash.
First, one of the most important factors was, in my opinion, speculation. But how did this factor lead the stock market to crash? Speculation is a form of gambling. People saw speculation as a great form of business in which you won a lot of money. Speculators did not intend to keep their shares for long.They asked for loans, bought the shares, as soon as the prices of it had risen, they sold them. But in which way did this affect the crash? Anyone could buy a share, common people were shareholders. These peoplehad no idea how to use the shares, when to sell them. So when the companies began to break down these people saw that the prices of the shares went down, so they wanted to sell them. As everybody that had shares sold them, nobody bought them.
Second, overproduction. This is a factor that helped much in the Wall Street Crash. In the economic boom new products were created, such as the radio. The people started to buy these new products, but when the people had already bought that product, they were not going to buy it again. But the companies kept on producing and no one was buying those products that were produces. As not all the population was able to buy the products, there were a lot of people that did not have the new products. Also the loss of the export market, helped overproduction to grow, as the US products were not exported to other countries because of the high tariffs put on the products. As the companies were not able to sell the products they produced, the prices fell. This led that the prices of shares also fell and speculation failed, as nobody could sell their shares.
Third, the distribution of income was a very important cause, that led to the Wall Street Crash. In movies and books it is shown that everyone in the population enjoyed the boom, but we know that this statement is not correct. The 42% of the American population did not benefit from the boom. This was the poor sector of the population were not very well paid and many people could not even satisfy their essential needs, they were not able to buy luxurious products, such as the radio or washing machine. Only the rich sector was the one that enjoyed the boom. But when the rich people had already bought the products they needed and poor people could not afford to buy new products, there was not and export market so these factors led to an overproduction. Prices of products fell as well as the price of shares.
In conclusion, there is not an only cause that led to the Wall Street Crash, as all the causes are linked with each other.