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5 Dec 2025

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The 1929 Wall Street Crash Explained

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Gracey @gracey_irtg

The Wall Street Crash of 1929 wasn't just a single day of financial panic - it was the... Show more

Overproduction
Top 5% of the population benefited most from the prosperity in the 1920's. The rich became richer due
to the low tax policies

The Build-Up to Disaster

Ever wondered how an entire country can go from boom to bust almost overnight? The Wall Street Crash happened because the American economy in the 1920s was like a house of cards - impressive from the outside, but dangerously unstable.

Overproduction became a massive problem when factories produced more goods than people could actually afford to buy. The top 5% of Americans owned 33% of the nation's wealth, whilst the bottom 40% only had 12.5%. This meant most people simply couldn't afford all the cars, radios, and household goods being manufactured.

The Fordney-McCumber Tariff of 1922 made things worse by putting high taxes on foreign imports. Other countries retaliated with their own tariffs on American goods, making it even harder to sell products abroad. Between 1920-29, US manufacturing capacity rose by 50% but imports only grew by 38% - a clear sign of trouble ahead.

Land speculation in Florida gave everyone a preview of what was coming. Miami's population exploded from 30,000 to 130,000 between 1920-25 as people rushed to buy property. However, by 1926 the Florida Land Boom collapsed due to poor infrastructure and a devastating hurricane that made investors think twice.

Key Point When the top 5% of Americans owned a third of the nation's wealth, there simply weren't enough customers with money to keep the economy growing.

The bull market of the 1920s convinced people that share prices would rise forever. Share values on the New York Stock Exchange nearly doubled from 34billionto34 billion to 64 billion between 1925-29. Many Americans borrowed money to buy shares at just 10% of their price, hoping to sell them later for a profit - President Hoover called it a "mad orgy of speculation."

Overproduction
Top 5% of the population benefited most from the prosperity in the 1920's. The rich became richer due
to the low tax policies

Banking Problems That Made Everything Worse

The American banking system in the 1920s was a disaster waiting to happen, and when it finally did, it dragged the entire economy down with it. These weren't just small problems - they were fundamental flaws that made the crash inevitable.

Weak banking regulations created chaos across the country. Under Benjamin Strong, the Federal Reserve Board kept interest rates low at 3.5% in 1927, encouraging massive borrowing. Banks invested this money in risky share speculation rather than productive business ventures that could help the economy grow.

Call loans became the banking system's Achilles' heel. These were loans given to people to buy shares "on the margin" - essentially gambling with borrowed money. When share prices started falling in autumn 1929, thousands of banks couldn't get their money back from borrowers who'd lost everything.

The problem was made worse because only half of American banks followed Federal Reserve System regulations. Thousands of smaller banks were restricted to operating in just one state with limited funds. Between 1921-28, an alarming 5,000 banks went out of business - a clear warning sign that few people noticed.

Key Point When 5,000 banks failed before the crash even happened, it showed the banking system was fundamentally broken and couldn't handle any serious economic pressure.

It wasn't until 1933 that the Glass Steagall Act began creating a modern banking system that could actually support the economy. By then, America had already endured years of economic depression that could have been avoided with better banking regulation from the start.

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This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

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Paul T

iOS user

 

History

364

5 Dec 2025

2 pages

The 1929 Wall Street Crash Explained

user profile picture

Gracey

@gracey_irtg

The Wall Street Crash of 1929 wasn't just a single day of financial panic - it was the dramatic result of several economic problems that had been building throughout the 1920s. Understanding what caused this massive economic collapse helps explain... Show more

Overproduction
Top 5% of the population benefited most from the prosperity in the 1920's. The rich became richer due
to the low tax policies

Sign up to see the contentIt's free!

Access to all documents

Improve your grades

Join milions of students

By signing up you accept Terms of Service and Privacy Policy

The Build-Up to Disaster

Ever wondered how an entire country can go from boom to bust almost overnight? The Wall Street Crash happened because the American economy in the 1920s was like a house of cards - impressive from the outside, but dangerously unstable.

Overproduction became a massive problem when factories produced more goods than people could actually afford to buy. The top 5% of Americans owned 33% of the nation's wealth, whilst the bottom 40% only had 12.5%. This meant most people simply couldn't afford all the cars, radios, and household goods being manufactured.

The Fordney-McCumber Tariff of 1922 made things worse by putting high taxes on foreign imports. Other countries retaliated with their own tariffs on American goods, making it even harder to sell products abroad. Between 1920-29, US manufacturing capacity rose by 50% but imports only grew by 38% - a clear sign of trouble ahead.

Land speculation in Florida gave everyone a preview of what was coming. Miami's population exploded from 30,000 to 130,000 between 1920-25 as people rushed to buy property. However, by 1926 the Florida Land Boom collapsed due to poor infrastructure and a devastating hurricane that made investors think twice.

Key Point: When the top 5% of Americans owned a third of the nation's wealth, there simply weren't enough customers with money to keep the economy growing.

The bull market of the 1920s convinced people that share prices would rise forever. Share values on the New York Stock Exchange nearly doubled from 34billionto34 billion to 64 billion between 1925-29. Many Americans borrowed money to buy shares at just 10% of their price, hoping to sell them later for a profit - President Hoover called it a "mad orgy of speculation."

Overproduction
Top 5% of the population benefited most from the prosperity in the 1920's. The rich became richer due
to the low tax policies

Sign up to see the contentIt's free!

Access to all documents

Improve your grades

Join milions of students

By signing up you accept Terms of Service and Privacy Policy

Banking Problems That Made Everything Worse

The American banking system in the 1920s was a disaster waiting to happen, and when it finally did, it dragged the entire economy down with it. These weren't just small problems - they were fundamental flaws that made the crash inevitable.

Weak banking regulations created chaos across the country. Under Benjamin Strong, the Federal Reserve Board kept interest rates low at 3.5% in 1927, encouraging massive borrowing. Banks invested this money in risky share speculation rather than productive business ventures that could help the economy grow.

Call loans became the banking system's Achilles' heel. These were loans given to people to buy shares "on the margin" - essentially gambling with borrowed money. When share prices started falling in autumn 1929, thousands of banks couldn't get their money back from borrowers who'd lost everything.

The problem was made worse because only half of American banks followed Federal Reserve System regulations. Thousands of smaller banks were restricted to operating in just one state with limited funds. Between 1921-28, an alarming 5,000 banks went out of business - a clear warning sign that few people noticed.

Key Point: When 5,000 banks failed before the crash even happened, it showed the banking system was fundamentally broken and couldn't handle any serious economic pressure.

It wasn't until 1933 that the Glass Steagall Act began creating a modern banking system that could actually support the economy. By then, America had already endured years of economic depression that could have been avoided with better banking regulation from the start.

We thought you’d never ask...

What is the Knowunity AI companion?

Our AI Companion is a student-focused AI tool that offers more than just answers. Built on millions of Knowunity resources, it provides relevant information, personalised study plans, quizzes, and content directly in the chat, adapting to your individual learning journey.

Where can I download the Knowunity app?

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Is Knowunity really free of charge?

That's right! Enjoy free access to study content, connect with fellow students, and get instant help – all at your fingertips.

9

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Transform this note into: ✓ 50+ Practice Questions ✓ Interactive Flashcards ✓ Full Mock Exam ✓ Essay Outlines

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Quiz
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1920s Economic Transformation

Explore the key factors behind the 1920s economic boom in the USA, including technological advancements in production, mass production techniques, and supply-side policies. This summary provides insights into the era's industrial growth, consumerism, and the impact of advertising and marketing. Ideal for Edexcel A-Level History Route H students.

HistoryHistory
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The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.

Stefan S

iOS user

This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

Samantha Klich

Android user

Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.

Anna

iOS user

Best app on earth! no words because it’s too good

Thomas R

iOS user

Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.

Basil

Android user

This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.

David K

iOS user

The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!

Sudenaz Ocak

Android user

In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.

Greenlight Bonnie

Android user

very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.

Rohan U

Android user

I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.

Xander S

iOS user

THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮

Elisha

iOS user

This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now

Paul T

iOS user

The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.

Stefan S

iOS user

This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

Samantha Klich

Android user

Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.

Anna

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Thomas R

iOS user

Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.

Basil

Android user

This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.

David K

iOS user

The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!

Sudenaz Ocak

Android user

In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.

Greenlight Bonnie

Android user

very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.

Rohan U

Android user

I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.

Xander S

iOS user

THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮

Elisha

iOS user

This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now

Paul T

iOS user