The Great Depression in the USA
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28. The Great Depression in the USA
Main causes and consequences of the Great Depression
Causes:
Raising popularity of the New York Stock Exchange (Wall Street)
In the 20’ you could have bought shares on credit and made money this way
Many people borrowed huge amounts of money from the banks, to buy shares “on the margin”
Fall 1929: the urge to buy shares became a sort of fewer and prices went up
The companies weren’t producing that much profit – people/investors started to slowly sell their shares
More and more people sold their shares – the prices of shares were falling unstoppably
Black Thursday, Terrifying Thursday
Consequences
By the end of 1929 the value of all shares had dropped by 40.000 (dollars)
Thousands of people, mostly those who borrowed to buy shares “on the margin” found themselves in a huge debt, often without job or even homeless
People decided to rather save the money than spending them on new gadgets (cars, radios…)
American factories were already overproducing by that time, but now even less people wanted to buy their goods
The factories had to dismiss many workers, which resulted in huge unemployment
At that time people had become no social help from the state – homelessness
All were suffering – people, workers in the cities, farmers on the countryside…
The call for help and solution from president Hoover was getting stronger
He had only promised, but not taken any action
New president Roosevelt was almost unanimously elected, after promising a “New Deal”
Black Thursday
On Thursday – October 24th, 1929, the panic unleashed and people sold over 13 Million of shares
This day was later known as a “Black Thursday”
On the following Tuesday – October 29th 1929, other 16, 5 Million of shares were sold, that is known as the “Terrifying Tuesday”
Roosevelt’s New Deal
The main idea was that the federal government should take the lead in the fight against the Depression
He set up many government organisations, so called “agencies”
The Civilian Conservation Corps found the work for many young men
The Federal Emergency Relief Administration gave money to fight against unemployment and homelessness
The Agricultural Adjustment Administration…
This had helped many people not just regain their jobs, but also their confidence, they again owned possession, had independence and self-confidence
Despite that, many people feared losing their jobs again, many thought the Deal is just a drainage for the economy, or that it is ‘too soft and planned’
1939 around 10M people were again without their jobs
What helped to start the economic 100% again, was the WW2 in Europe, because the USA became the no. 1 supplier of the weapons for the Allies