The Great Depression, 1929-1933
Episode #5 of the course “World’s biggest financial crises”
Perhaps the reason that Americans were so willing to lend the Germans money was because they were experiencing an economic boom in the 1920s (the Roaring Twenties). Businesses were making great gains and manufacturing was extremely lucrative. However, wages had increased only 8 percent compared to the profits that businesses were experiencing–levels around 65 percent. This imbalance caused a huge gap between the economic classes. Individuals were also taking on more personal debt because they were buying more products on credit.
This situation was just not sustainable. On October 29, 1929, in what became known as Black Tuesday, the stock market crashed, triggering the beginning of the worst economic collapse of the industrialized world. By November, the stock market lost roughly $30 billion. This not only affected the United States—the crash affected virtually the entire world, lasting until the early 1940s. Businesses failed left and right, and banks shut their doors. More than 15 million Americans were out of work. Food riots began in 1931, and Americans stole the food that they could not afford to purchase from grocery stores and local markets. The largest bank failure in the United States also occurred in 1931 with the failure of New York’s Bank of the United States. In rural areas, dust storms from overused soil plagued the land, making farming impossible.
The president at the time, Herbert Hoover, was largely blamed for the crisis and did little to combat it. When elections arrived in 1932, Americans were eager to elect a new leader. Franklin Roosevelt laid the foundation for the New Deal in his presidential campaign, and this program ultimately helped America move back toward economic progress. It provided work for those who needed jobs, supplied additional relief grants, and reformed the banking industry. Significant environmental developments also occurred during this time.
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