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THE CRISIS OF 1929 AND THE GREAT DEPRESSION . image, NICO URRUTIA -…
THE CRISIS OF 1929 AND THE GREAT DEPRESSION
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An abrupt end to prosperity
Much of the boom in the US was based on massive financial growth
Company profits and savings of middle-class families were invested
In the stock market
Increase in credit operation without sufficient repayment guarantees
As a result of intense especulation
The New York stock exchange was overvalued
A financial bubble grew and quickly burst
On 24 and 29 October 1929, Black Thursday and Tuesday, the share price fell sharply
Panic spread across the US within hoursInvestors sold huge amounts of shares
At much lower price than the original
This led to the
crash of the New York Stock Exchange
The crash of the New York Stock Exchange
COmpanies lost their value and their capital
Saversa saw their money dissapear, tranformed into unpayable debts
Most banks went bankrupt
Companies were no longer given credit
Many companies had to clase down and fire their workers
Industrial production declined
The end of prosperity
:chart_with_downwards_trend: :chart_with_downwards_trend:
Repercussions
Many countries depended on US loans
The generalisation of this crisis is know as Great Depression
The worst crisis the capitalist system has ever endured
Measures to overcome the Great Depression
In Europe, the Great Depression especially affected industrialised countries
Austria
Germany
Great Britain
Countries and colonies that exported raw materials also suffered
Chile
India
Argentina
Malaysia
Brazil
Australia
SOLUTIONS
Joint measures were attempted
Trade agreements between countries
Each country decided wat solutions were most appropiate
Most of them were based on economic nationalism and state inervention in the economy
Great Britain
The state did not intervene despite having more than 3 million unemployed workers
Restricted itself to devaluation the pound by 25%
The devaluation of the pound favoured exports and invigorated the domestic market
United States
In 1923, President Rooslvelt proposed a shock plan to revive the economy
New Deal
Promotion of public jobs
SUbsidies for the firms
Control of banking
More social welfare
The devaluation of the pound was accompanied by a change
From the traditional British free trade policy to protectionism
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