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The Great Depression

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7 views2 pages

The Great Depression

Uploaded by

Elisha Luwangwa
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© © All Rights Reserved
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Stock market crash of 1929 | Summary, Causes, & Facts | Britannica

Topics | HISTORY

How did the economic depression make the work of the league of nations more difficult?

What was the economic depression?

Simple terms was known as the economic downturn, that began in 1929 and lasted unitl about 1939. It
was the longest and most severe depression ever experienced by the industrialized westerm world,
sparking fundamental changes in economic instutitions, macroeconomiic policy, and economic theory.

Started after the dramatic crash of the US stock market on October 20th 1929, a day known as black
Tuesday or the wall street crash. This event triggered widespread financial panic and let to decade of
high unemployement, poverty, defltation and sharp decline in industrial production and global trade.

Some people reduced to selling apples on street corners while others were kicked out of their homes
forced to live and survive in shanty towns that were called Hoovervilles named after the president
herbet Hover who in the early 1930s often claimed the prosperity was just around the corner.

Main causes of the great depression were stock market of 1929, further collapse in already low farm
prices, weak banking system, industrial over production and vulnerability in global economy.

STOCK MARKET CRASH

During the mid late 1920s, the stock market in the US underwent rapid expansion. This continued for
the first 6 months following president Herbert hoovers inauguration on January 1929. Hoover butt
market( the period of rapid stock market growth during the late 1920s particulary under president
hoover early presidency. This ended with the 1929 stock market crash)

Prices began to decline in September and early October, but speculation continued, fueled in many
cases by individuals who had borrowed money to but shares. The real day of panic October 24( black
Thursday) reocord of 12.9 million share were traded as investors rushed to slavage their issues. On black
Tuesday October 29th more than 6 million shares were traded. With banks collasing , credit dried up
making it difficult for business to borrow money, leading to layoffs and reduced production.

The effects were increased unemployement, falling demand amd more business closures. This also
impacted the global trade.

WEAK BANKING SYSTEM

Reducing the money supply by nearly 30 percent which reduced average prices by an equivalent amount
and increased debt burdens.

INDUSRTIAL OVER PRODUCTION

By creating more goods then people coulf afford to buy. During the 1920s factories produced large
amounts of products, but wages for workers didn’t keep pace, so many couldn’t afford. As inventories
piled u[, companies had to cut production leading to layoffs and lower wages which further reduced
demand causing businesses to fail and unemployment to rise.

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