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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Economic Effects
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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