2. 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.
3. 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.
4. Background
Economic 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.
5. 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.
6. 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.
7. 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.
8. 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.
