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The depression continues
The document summarizes how the Great Depression spread globally in the early 1930s. As unemployment rose in the US due to stock market crashes and bank failures, American consumers and businesses had less money to buy goods. This hurt companies' sales. Meanwhile, American banks and businesses started demanding repayment of loans from European countries like Germany, worsening their economic crises. The globalization of trade and finance then caused the worldwide depression, as poor nations also suffered from reduced lending and investment from Europe and America.
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The depression continues
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- 2. Wash, Rinse, Repeat Because the Stock Market crashed, companies laid people off. This made the surplus stock grow, because less Americans could buy companies’ items. More people then went to the banks to withdraw all their money. More layoffs
- 3. Runs on thebank When people ran to get to their money out of a bank, it was called a “run on the bank.” Banks loan money out using the money put in. When people took their money out suddenly, many banks had to close completely.
- 4. Calling in theloan At the same time, in an attempt to recoup the money they were losing, banks required people to pay ALL the money they were loaned or they would lose their house/car/etc.
- 5. Continuing the Cycle Unemployment and homelessness continued to increase, banks and businesses closed, and the economic depression in the U.S. then intensified the worldwide depression.
- 6. A Change ofDirection Remember the Depression began in Europe. Remember Europe owed America a great deal of money for loans during and after World War I. Germany borrowed more money from the United States to pay back reperations.
- 7. Taking these ideasglobal Similar to how banks were treating American consumers, American banks and businesses that loaned Europe money began demanding their money back. Many countries in Europe (Germany especially) suffered even more due to this.
- 8. The Third World Poor nations (Asia, Africa, and South America) are often called the Third World. Countries in the Third World suffered because European and Americans stopped loaning and investing in them.
- 9. Worldwide Depression Asthese investments decreased, the economies in nations of these other continents began to suffer, and by the early 1930s the worldwide depression had begun.