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02 THE CRISIS OF 1929 AND THE GREAT DEPRESSION, image, image, image, image…
02 THE CRISIS OF 1929 AND THE GREAT DEPRESSION
AN ABRUPT END TO PROSPERITY
During Roaring Twenties, much of the boom in the US economy was based on massive financial growth
Company profits and savings of middle-class families were invested
hoped to get rich in a short period of time
New York Stock Exchange was overvalued
On 24 and 29 October 1929, Black Thursday and Tuesday, share price fell sharply
Within hours, panic spread across United States
Investors sold huge amounts of shares at a much lower price than the original
priority was to get rid of shares
led to the crash of New York Stock Exchange
Savers' money disappear, transformed into debts
Companies lost value and capital
Banks went bankrupt
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repercussions of the economic crisis were felt around the world
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the worst crisis capitalist system ever endured
MEASURES TO OVERCOME THE GREAT DEPRESSION
Great Depression especially affected industrialised countries
In Europe, most affected countries were
Austria
Germany
Great Britain
suffered consequences similar to those endured by the US economy
Countries and colonies that exported raw materials suffered the Great Depression
industrial countries who bought their products didn't had the same purchasing power
Brazil
Argentina
Chile
India
Malaysia
Australia
each country carried out the solutions it considered most appropriate
were based on economic nationalism and state intervention in the economy
Both strategies were used by the main economic powers of the time
In Great Britain
state didn't intervene in the economy and restricted itself to devaluing the pound by 25%
pound lost part of its value against other foreign currencies
favoured exports and invigorated the domestic market
change from the traditional British free trade policy to protectionism
In United States
Roosevelt proposed a shock plan to revive the economy
proposed state intervention, which involved
subsidies for firms
control of banking
promotion of public works
more social welfare
known as the ‘New Deal’
