How Far Was over-Speculation Responsible for the Wall Street Crash?

There were many underlying problems and factors which connected together and lead to the Wall Street Crash in 1929, causing the depression which in turn caused many problems for America and sent waves across the rest of the world. Over-speculation was one of the main factors which lead to the Wall Street Crash. During the 1920s more Americans invested and bought more shares. As they did so, prices kept rising which meant their profits did too. This lead to confidence and Americans just wanted to invest more money in order to gain more profit.

When shares stopped rising at the same rate in 1928 due to companies not selling many goods and their profits decreasing, people were less willing to buy shares and confidence dropped. Nonetheless, once this minor downturned was over, greed took over and Americans returned to speculating as prices rose. This failing to see the warnings of upcoming failure and assuming and speculating too much meant that in the running up to the Wall Street Crash, Americans were unable to see it coming.

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The decisions and choices that m=bankers made when faced with the result of over-speculation also affected the stock market, the reaction of the people and ultimately the devastation of the Wall Street Crash. This short term cause was controlled by the moves that the American bankers made. In addition to them, the actions of large shareholders also affected the decisions that others made; when big shareholders began to sell their shares, others followed and despite bankers’ efforts to put money into them and save the stock market, this failed to work.

The uncertaincy and lack of preparation when it came to controlling the market meant that investors were extremely concerned as to what would happen to their money. This in turn led to the mad rush to sell shares as a last option. Despite the idea that the boom of the 1920s was a prosperous period for all, it did not affect all American’s positively. Nearly 50% of American families had an income which was less than $2000 a year which was the minimum to survive.

The fact that the amount of income across America was not distributed fairly meant that those who had more money were in a more comfortable position. They invested more shares into the market and because they were so comfortable, poorer Americans may have invested too in order to try and gain wealth as they did. This resulted in a huge amount of money being put into the stock market and the eventual overheating caused the crash. Unequal distribution of income was also one of the causes of overproduction.

After the war had ended, overproduction had become a problem immediately for farmers and continued to be, as well as affecting manufacturers and businesses. Fewer mass produced products were being sold as less Americans had the money to buy then due to the wages dropping. More goods were being produced than there were Americans to buy them and this was not helped by the new Tariff policy which had been introduced. This meant that I was far more costly to purchase goods from America, resulting in them losing a large export market.

Many European countries also owed money to America so they could not afford to buy from America anyway. To summarise, all of the above problems together were responsible for the Wall Street Crash; the fact that the majority of them led to one another made some problems more lethal than other. Due to this this I would have to conclude that over-speculation was responsible for the stock market crash in 1929, but it was not the sole reason and other reasons can be considered far more responsible; such as overproduction as it was affected by so many aspects and was an endless cycle of prob

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How Far Was over-Speculation Responsible for the Wall Street Crash?. (2017, Jan 20). Retrieved from