USA HISTORY

Detailed explanation-1: -The main cause of the Wall Street crash of 1929 was the long period of speculation that preceded it, during which millions of people invested their savings or borrowed money to buy stocks, pushing prices to unsustainable levels.

Detailed explanation-2: -People Bought Stocks With Easy Credit People encouraged by the market’s stability were unafraid of debt. The concept of “buying on margin” allowed ordinary people with little financial acumen to borrow money from their stockbroker and put down as little as 10 percent of the share value.

Detailed explanation-3: -The rising share prices encouraged more people to invest; people hoped the share prices would rise further. Speculation thus fueled further rises and created an economic bubble. Because of margin buying, investors stood to lose large sums of money if the market turned down, or failed to advance quickly enough.

Detailed explanation-4: -How did speculation and margin buying cause stock prices to rise? The value of stocks declined, people who had bought on margin had no way to pay off the loans.