3 Agricultural recession also contributed to the crash
Due to advancement in production techniques in the 1920s, there was a great rise in production in industries like automobile. But the demand didn’t rise proportionately and this led to many companies struggling to sell what they produced. Also with better technology there was an increase in supply of food but the demand couldn’t keep pace. Therefore, prices fell and farmers’ incomes dropped leading to widespread financial despair among American farmers.Disappointing profit results of companies and agricultural recession were major causes behind the crash.
4. There was a mini crash in March before the Wall Street Crash in October
Speculation is the practice of engaging in risky financial transactions to profit from a fluctuating market. In March 1929, the Federal Reserve warned investors of excessive speculation. This led to a mini crash in the stock market exposing its shaky foundation. However Charles E. Mitchell announced that his company the National City Bank would provide $25 million in credit to stop the market’s slide. The mini-panic was overcome and on September 3, 1929, the Dow peaked at381.7 points.