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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
1 AN ABRUPT END TO PROSPERITY
During the Roaring Twenties, much of the boom in the US economy was based on massive financial growth
Company profits and the savings of many middle-class families were invested
In unprecedented speculative operations on the stock market
In unprecedented speculative operations on the stock market was overvalued
On 24 and 29 October 1929, Black Thursday and Tuesday, the share price fell sharply
Investors sold huge amounts of shares at a much lower price than the original
This led to the crash of the New York Stock Exchange
Companies lost their value and their capital
Most banks went bankrupt as they could not collect money for credit granted
This was the end of the period of prosperity and of the short-lived Roaring Twenties
The repercussions of the economic crisis were quickly felt around the world
Many countries depended on US loans that were cancelled
This generalisation of the crisis is known as the Great Depression
This was the worst crisis the capitalist system had ever endured
Economic crises are a phenomenon that are part of the capitalist system and happen in cycles
This affected almost all the social clases
DOROTHEA LANGE (1895–1965)
Dorothea Lange was an American documentary photographer and photojournalist
Her photographs during the great depression greatly influenced the development of documentary photography and humanised the consequences of this period
She toured part of the United States recording the effects of the Great Depression
2 MEASURES TO OVERCOME THE GREAT DEPRESSION
The Great Depression especially affected industrialised countries
In Europe, the most affected countries were Great Britain, Austria and Germany
This ones suffered consequences similar to those endured by the US economy
Countries and colonies that exported raw materials also suffered the effects of the Great Depression
Brazil, Argentina, Chile, India, Malaysia and Australia saw a drastic reduction in their exports
In general, they were based on economic nationalism and state intervention in the economy
In the United States, in 1933, President Roosevelt proposed a shock plan, known as the ‘New Deal’
He proposed state intervention, which involved the promotion of public works, subsidies for firms, the control of banking and more social welfare
In Great Britain, despite having more than 3 million unemployed workers
The state did not intervene in the economy and restricted itself to devaluing the pound by 25%
The pound lost part of its value against other foreign currencies
The devaluation of the pound was accompanied by a change from the traditional British free trade policy to protectionism
If free trade is committed to the free movement of goods without the state intervening to regulate international trade
Protectionism consists of establishing customs tariffs on imports to favour the country’s own industry
