- October 1929, share prices fell on Wall Street stock exchange in New York.
- This meant that investments fell in value.
- Therefore, people ran to sell shares before they fell further.
- On 'Black Thursday', 24 October, 13 million shares were sold. This panic sent prices even lower.
- Shares worth $20 000 in the morning were worth $1000 by the end of the day.
- Within a week, investors lost $4000 million.
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- Banks were major investors and suffered huge losses.
- germany banks lost so much money, people feared they couldn't pay money out in bank accounts.
- People rushed to get their money back, causing some banks to run out of cash.
- America needed their loans returned and so did Germany banks from loaning money to companies, which were dependent on the loans, so operations were either reduced or closed.
- Industrial output fell and unemplyment rose.
- Worldwide depression was caused.
- High employment meant domestic demand for goods fell, and unemployment fell further.
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Social & Political effects
- The middle class lost savings, companies and homes.
- Workers became unemployed.
- Weimar government failed when political action was demanded.
- Taxes were raised to pay the cost of unemployment benefit, and reducing the unemployment benefit so payments were more affordable.
- Left wing parties and working classes opposed lower unemployment benefits.
- Right wings and middle classes opposed higher taxes.
- The coalition of parties that Bruning's government depended on collapsed in 1930. He could only govern by decree.
- There'd only been 4 decrees in 1930. In 1931, there were 44, and in 1932, there were 66.
- Confidence in the government diminished.
- Bruning resigned in 1932; he lost control of the Reichstag, the economy and the streets.
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