THE ECONOMIC IMPACT OF THE GREAT DEPRESSION 1929

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Economic impact of Depression

Causes

  • October 1929 - Black Thursday : New York Stock Exchange experienced fall in share prices.
  • October 1929 - Wall Street Crash in USA : millionaires lost their fortunes, and small investors lost their savings.
  • Companies went bankrupt, workers lost their jobs.
  • BANKS STARTING CALLING IN EXISTING LOANS

Effects

  • German economy entered a deep depression.
  • Germany's economic recovery 24-28 was financed by American loans - they demanded immediate payment.
  • Germany's export trade declined, USA was the biggest oversea market for German manufactured goods (depression reduced demands).
  • 1929 - 1939: Germany's export trade declined by 61%.
  • Industrial production fell 58% of its 1928 levels.
  • Companies became bankrupt, and workers became redundant or workforce was reduced & wages.
  • July 1931: the gov closed banks and the stock exchange (just temporary respite (pause).
  • Banks: customers withdrew money and outstanding loans were not paid.
  • Unemployment: by 1939 one third of all Germans were registered as unemployed.
  • Many redundant workers and women didn't register - in Jan 1933 the true number of unemployment was 8 million.
  • Impacted industrial areas e.g. Ruhr, Silesia and Hamburg.
  • Farmers were hit badly - and struggled during the golden age ~(depression pushed to serious difficulty).
  • Prices collapsed, exports of agriculture declined, sales for food fell as Germans had less money.
  • Farmers forced to give up their farms as banks demanded repayment of loans - farm laborers lost their jobs.

Overall summary

The Depression which began with the Wall Street Crash in 1929 had a devastating effect on German society. Although the worst economic effects of the Depression did not appear until 1931 and 1932, the rise in unemployment placed an intolerable strain on the consensus in the Grand coalition and it collapsed March 1930.

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