This backfired. Farmers started to produce a lot of food like wheat and grain that very few people wanted. Just as the farming efficiency raised to the Canadians level, there was no one to buy or nowhere to ship all this produce. This all led to farming families rapidly losing money and supplying goods at rock bottom prices and which yet became a struggle to sell. The boom was leading people away from basic farming food and to other chains available to them.
Even though there was an abundance of goods mass produced and at a cheap price because of that, so many people now had no jobs so the goods were not being purchased. Even though, from 1920 to 1929, consumerism and overproduction partially caused the Great Depression, the unequal distribution of wealth and income was the most significant catalyst. From 1920 to 1929 consumerism partially caused the Great Depression due to speculation and installment buying. Speculation is the act of investing in a stock with the hope of a big gain but the risk of a big loss. Many of the investors were sure that the stocks they were going to buy were going to grow, therefore they received big loans that, once the market crashed and all the money was gone, they could never pay b... ... middle of paper ... ...e excessive speculation in the late 1920's kept the stock market artificially high, but inevitably led to the big crash.
This plan was established because many Americans didn 't have enough money to buy goods and services that were needed or wanted. The installment plan stated that people could buy products on credit and make monthly payments. The one major problem with this idea was that people soon found out that they couldn 't afford to make the monthly payment(Drewry and O 'connor 559). In 1929 the stock market crashed. Many Americans purchased stocks because they were certain of the economy.
Before the great depression started, so many people said they couldn’t pay the banks back, which caused the banks to close down. During the late 1920’s American consumers were buying less, prices were rising and Americans were overbuying on credit which were to blame, problems with the economy emerged. Many American people were engaged in speculation- they were buying bonds, and also stocks hoping to make a quick profit. Americans were buying “on margin”- which is paying a small percentage of a stock’s price using it as a down payment and borrowing the rest of the money. A lot of Americans put all of their saved money into the stock market.
This was where you would buy lots of stocks with a loan, then way for them to rise slightly, and sell them off again, making a quick and easy profit. Many banks got involved in speculation, but people started to lose faith in the stock market, so everyone started to sell their shares. This meant that there were much more sellers than buyers which meant the whole system crashed. This caused banks to go bankrupt, along with everyone's money that were in those banks. This caused people to withdraw their savings from banks, causing even more to close down.
This caused them to ran out of money and stop farming. (JaredandKelly, pt 4, 2-3) On March 25 1929, a small crash occurred after many investors started selling stocks at such a quick pace. Even after Charles E. Mitchell announced he would be providing $25 million in credit to stop the shaky foundation, it lasted temporarily. Moreover, the American economy started showing some problems after steel production were declining, and those that borrowed money from the bank... ... middle of paper ... ...y the citizens. Other than Roosevelt’s optimism, the gold standards increased, making the whole recovery even possible.
The stock market crash during the 1920s, stock prices far exceeded their real value. Many stock buyers bought stock on boundary, or on money borrowed from the stock brokers. When stock prices fell many investors with margin accounts were forced to sell, driving prices down even further. Stock prices began to fall in September 1929, but in October 29 so called “Black Tuesday”, was the worst day in stock history, the stock market on that day, the prices drop dramatically. When the economy collapsed with it, people everywhere lost their jobs and homes.
Both the rich and poor were petrified, and the rich even concealed their money so no one could take it from them. The whole economy was get flustered so people just stopped spending their money unless it was something really important. One of the first things that led into the Great Depression was the stock market crash of 1929. Stocks are shares of a company that a person can buy. In the 1920s, the stock
The US stock market collapsed completely. No one wanted the shares. The shares were sold for very low prices. Most of the people had taken out loans to buy the shares. The people thought that if they take out a loan and buy the shares they could make enough money to pay the loan back and have enough for profit.
This startled the investors and thus were searching for alternative people to buy his/her stock. The people who borrowed money from banks were unable to repay them which led to bankruptcy. Another cause would be the increase in the production of electrical appliances.This enabled american businesses to rise. People bought goods from businesses using credit cards, which allotted them time to pay money later. People bought many goods this way and were not able to buy merchandise later on because they were in debt.