Effects of the Wall Street Crash

What were the effects of the Wall Street Crash on the American economy?

The Wall Street Crash was disastrous for the American economy.

What effect did the Wall Street Crash have on banks?

The Wall Street Crash meant serious problems for American banks.

• ❖ Because banks were major investors and shareholders, the Wall Street Crash caused them to lose a lot of money.
• ❖ Many people had borrowed money from the banks to buy shares and couldn't pay it back.
• ❖ Because of the panic, many people took their money out of the banks before it was lost.
• ❖ When everyone tried to take their money at once it was called a 'run on the bank', and the bank would then fail.
• ❖ Because they were short of money, banks had to recall loans and stopped lending money to businesses.

What effect did the Wall Street Crash have on businesses?

The Wall Street Crash had a knock-on effect on businesses.

• ❖ Because of the panic, and because people lost money, demand for goods dropped.
• ❖ Without loans from the banks, many businesses couldn't afford to keep running and had to close down.
• ❖ Many businesses had to invest less, cut production and reduce their workers' hours.