The Great Depression: How It All Began

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The Great Depression: How It All Began
The Great Depression: How It All Began

Video: The Great Depression: How It All Began

Video: The Great Depression - 5 Minute History Lesson 2022, December

The Great Depression is a deep and prolonged economic crisis that began in 1929. from the collapse of stock exchanges in the United States and lasted until World War II. It caused colossal damage to the economies of Western countries - Great Britain, France, Germany, but most of all the "Great Depression" was felt by the Americans.

The Great Depression: How It All Began
The Great Depression: How It All Began


Step 1

At the beginning of the 20th century, the US economy developed at a colossal pace. In just 10 years, from 1917 to 1927, the national income has tripled. The introduction of conveyor production was a huge leap forward in the development of industry. The shares of enterprises were growing, the stock market was developing rapidly, along with it the number of speculative transactions grew. The growth of production and the abundance of manufactured goods that were thrown onto the market required an increase in the money supply.

Step 2

Then the US dollar was still pegged to gold. But the problem was that the state's gold reserves increased much less rapidly and, simply, did not keep pace with the development of the economy. The market was filled with products that there was nothing to buy for. The government was forced to print new money, thereby undermining the gold backing of the currency. The budget deficit was growing and the Federal Reserve Bank reduced the discount rate.

Step 3

All this led to the fact that, in the end, the growth of labor productivity decreased, and the amount of pseudo-money (bills, receipts, etc.) increased. The bubble inflated and burst on October 29, 1929, when an imbalance in the economy caused the stock market to crash.

Step 4

This day has forever gone down in history as "Black Tuesday". The reason for the collapse was the speculators who had been actively flourishing on the stock exchange in previous years. The shares of industrial corporations were growing and the Americans were actively investing in them, trying to sell them later at several times more expensive. This excitement provoked an even greater rise in the value of shares. Fascinated by the get-rich-quick opportunity, many bought them on credit.

Step 5

The stock exchange began to fever on October 24, when about 13 million shares were sold. Investors got nervous and began to quickly get rid of their securities. This caused a drop in stock prices and even greater panic. In the following days, another 30 million shares were thrown onto the market.

Step 6

On Tuesday, October 29, 1929, the stock exchange collapsed completely. On that day, $ 16 billion worth of securities were sold. This meant instant ruin by thousands of investors. Many of them committed suicide.

Step 7

Following the exchange, the banking system burst. Previously, banks issued loans for the purchase of shares and now they have lost huge amounts of money. Thousands of firms and companies have gone bankrupt. Unemployment has grown to unprecedented proportions, and a third of the working population has been left without a livelihood. The country was covered with a wave of protests and demonstrations.

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