Speculation

• The conventional understanding of what lead to the stock market crash in 1929 was that rampant speculation had inflated prices and interest rates to an unprecedented level. The overall sense was that stock prices were too high and they "had" to fall. Some economists believe that it was the perception, not the reality, of an overvalued stock market that led to the crash. This impression caused the United States to increase interest rates to limit speculation, which resulted in a decrease in spending and production.
  
  

Housing and Agriculture

• An excess of housing, caused by a boom in housing construction in the mid-1920s, led to a large drop in construction in the late 1920s. Similarly, small farms had given way to larger, technology driven agriculture. However, demand could not keep up with supply, leading to a decrease in prices and, therefore, farmers' incomes. Both of these market issues led to increasing unemployment.
  
  

Public Utility Stocks

• High prices of public utility stocks followed by a sudden decline is given as an important factor in the stock market crash of 1929. An increase in margin buying accompanied by growth of investment trusts and public utility holding companies led to high sales of public utility stocks and increasing demand. When prices declined, margin buyers sold en masse and triggered panicked sales of all stocks.
  
  

Banking System

• Large numbers of small banks led to weakness in the banking system when downturns in the agricultural and housing markets occurred. Small banks were more susceptible to bankruptcy in the event that there was a run on deposits. Both stock market panic and recession led to the collapse of many small banks across the United States.