The Great Depression
The great depression was a long lasting economic downturn lasting from 1929-1939, which affected much of the Western industralised world. At the peak of the economic turmoil 13-15 million Americans were unemployed and half of US banks had collapsed.
Wall Street Crash
The great depression is thought to have begun on October 24, 1929, on a day known as ‘’Black Thursday’’, as investors started to get rid of their stocks on a mass scale. A record 12.9 shares were traded on Black Thursday. Another event five days later, known as ‘’Black Tuesday’’, worsened matters as 16 million shares were sold on Wall Street and made many shares redundant.
Due to the economic relationships established between the USA and many European countries after World War I, the Wall Street crash had an effect on many European nations; particularly those which were heavily indebted to the US after such as Germany and the UK. Germany in particular was greatly indebted as it was ordered to pay reparations to the USA and many other European countries following its loss in the First World War. As the US economy slumped even further, US banks recalled their loans leading to the total collapse of the German banking system.
The economic downturn had a profound effect on many countries around the world. During its peak, the unemployment rate in Germany reached 25% of the workforce in 1932, as it did in the US the same year. Exports also fell in most of the countries affected by the Great Depression; in the UK exports fell in value by 50%. In the US thousands of people were left homeless and started populating ‘’shanty towns’’ which led to the approval of the Federal Home Loan Bank Act to encourage construction of new homes.
Many political effects were felt in the countries most affected by the economic downturn. In Germany the rising unemployment caused unrest and led to the rise of both socialist parties and the Nazi party, which culminated in Adolf Hitler coming into power. Rise of such parties was also seen elsewhere such as in Japan and this led regressive foreign policies, which was a leading cause for the Second World War.
President Roosevelt also came into power during the Great Depression by promoting his ‘’New Deal’’ that supported the agriculture industry and led to improved public infrastructure such as the Hoover Dam and the Tennessee Valley Authority. However, many economists view the New Deal as a failure as it did not do as it promised which was to improve the economy. What really boosted the US economy is rearmament.
The Great Depression was a serious slump in many industralised economies around the world. The consequences led to the rise of the Nazi party in Germany, which was the main cause for the Second World War. However, the war also helped in the recovery of many economies such as in the United States