The Great Depression The great depression was a worldwide crisis that happened during the decade before the world war II. The crisis stated in 1929 and it extended until the end of he 30’s and the beginning of the 40’s. The great depression began in the united states with the fall of the stock on October 29, 1929 (knew as the “black Tuesday, although, already have been a black Thursday) and it expanded almost to all the countries in the world. The depression had the most devastating effects in poor and rich countries.
The national income, the revenue, the profits and the prices felt and the international trade declined between 50% and 66%. The unemployment in the united states reached 25% and in some countries 33%. The countries began to get together in the middle of the 30’s but the negative effects in many countries lasted until the beginning of the world war II. The election of Franklin Roosevelt as president en the establishment of the New Deal in 1932 stated the beginning of the end of the great depression in the United States.
BackgroundEconomic consequences of the world war I The left deeps economics consequences, giving an end to the international economic order, that existed since the second half of the twentieth century. The world war I also establish a new political map of Europe, with new borders that changed the commercial and economic structure of the continent. This broke the markets and made the loose economic efficiency, demanding new investments.
At the end of the war the United States experimented a strong evolution, moving Britain of the worldwide economic leadership. During the previous years of the great depression, the production and the demand increased in the country, dominated by the technologic innovation. Since the summer of 1929 a several of macroeconomics indicators had already began to suffer a small decline.
Causes Until 1925 the worldwide economy was balanced: the production was right back where it were before the war, the prices of raw material were stabilized and the countries through a period of high economy were numerous. However, there were a series of traditional balances that were not the same: in the UK, the unemployment and the endemic crisis were overwhelming. The international debt only could by pay with gold and merchandise, and the US inhibited their importations from Europe with new and every time more expensive taxes, at the same time they used their superiority to impose their exportations over Europe.
Since 1925, the activity of the stock had evolved as good as the industrial production of the country. The prices of the shares climbed regularly year after year, and the Americans found the source of a quick fortune in the stock speculations. The demand continued and the shares reached a very high level and soon the price of the stock become pure speculations. It was the rush to play in the stock speculations. The time passed and the Americans stared to play the stock with borrowed money, so in the stock market, when a stockbroker could not face a share he was forced to sell with lost in order to cover other possible creditors. Among the small speculators (millions of Americans) were very few who possessed considerable liquidity reserves.
In October 1929, all the system felt down and in a few days, the prices lost all that they had earn over the years. The small speculators were in ruin and they had to sell with lost. In October, 23, 1929, the prices registered a lost between 18-20 points (about 6 millions dollars), the next day between 20-30 points and 30-40 points for the biggest enterprises. On Monday 28, a new declined happened, loosing between 30-50 points and the next day past to the history as “black Tuesday”. In a few hours 16 millions of shares were sold with of 40%. Later in November, the contributions had fallen by half since he beginning of the stock crisis and no less than 50 billions dollars were vanish, also the non-existence of a banking sector and the initial failure of some banks made the banking crisis to spread all over the country, multiplying the effects of the crisis.