The stock market crash of 1929 The Great Depression: an economic catastrophe that changed the world
Do you know? Nearly a hundred years ago, the world experienced an unprecedented economic catastrophe, which plunged countless people into poverty and despair and changed the course of world history. This disaster was the Great Depression of 1929. The 1929 recession, the worst global economic crisis of the twentieth century, began with the crash of the U.S. stock market and affected almost all countries and regions. The spectacle of a depressed economy is poignant, and some people have even chosen suicide.
In the United States, unemployment is as high as 25 percent, and 14 million people have lost their jobs. Many were unable to repay their loans and were forced to move from their homes and live in shacks made of discarded materials.
What was the Great Depression? How did it happen? And what impact does it have? Today, I'm going to tell you this thrilling story.
First, let's go back to October 24, 1929, which became known as Black Thursday. On that day, the Wall Street stock market in New York suddenly plunged, triggering a panic sell-off. In just a few hours, stock prices fell to all-time lows, and many people lost all their wealth overnight. This is known as the "Wall Street crash".
Why did the U.S. stock market crash, you might ask? Isn't that strange? Isn't the United States the richest and most powerful country in the world? Didn't it go through a period of prosperity and happiness in the 20s?
In fact, the prosperity of the United States in the 20s was built on a huge bubble. This bubble is excessive credit and stock market speculation. Let me explain it to you.
In the 20s, the rapid economic development of the United States, the remarkable progress of industry and science and technology, the rise of emerging industries such as automobiles, movies, and broadcasting, and people's living standards have improved a lot. To meet people's demand for consumer goods and investment goods, banks and financial institutions lend in large quantities, allowing people to borrow money to buy things or buy stocks at very low interest rates. In this way, people can make a lot of money with very little money and feel rich.
However, this situation is not sustainable. Because people borrow money to buy things or stocks not based on their real income or wealth, but on their expectations or fantasies about the future. When these expectations or illusions are broken, the bubble bursts.
The trigger for breaking the bubble was a series of adverse factors that began to emerge in September 1929. Like what:
U.S. agriculture has suffered a severe crisis, with agricultural prices falling and farmers' incomes declining.
U.S. industry also had problems with overproduction and demand, and factories began to lay off workers and cut production.
U.S. banks and financial institutions are also facing funding constraints and credit crises that are unable to continue providing loans.
Instead of taking effective measures to stimulate the economy or bail out the market, the U.S. government raised interest rates and tariffs.
These factors have led to wavering confidence in the stock market and falling prices. When the stock price falls to a certain extent, people start to panic and sell their shares in an attempt to recover their losses. However, doing so will only make the stock price fall faster, creating a vicious circle. Eventually, the stock market collapsed.
What was the impact of the stock market crash? It's not just a problem for the United States, it's a problem for the whole world. Because the United States was the largest economy in the world at that time, its economic crisis would spread to other countries and regions. Let me give you a few examples:
In the United States, the stock market crash led to bank bankruptcies and a credit crunch, and people were unable to repay their loans and forced to move from their homes and live in shacks made of discarded materials, ironically known as "Hoover Village." Unemployment is as high as 25%, and 14 million people have lost their jobs. People's living standards have fallen drastically, and many are starving and frozen. [Image] is a famous photograph, taken in 1936, showing a farmer mother and her children living in poverty in California.
In Europe, stock market crashes have also triggered economic crises and social unrest. Exports from European countries were affected by lower US demand, but also by the withdrawal of US capital. There has also been protectionism and currency competition among European countries. Prices in European countries have skyrocketed and currencies have depreciated. Germany is one of the most affected countries, with inflation reaching alarming levels, and a banknote with a face value of 100 billion marks can only buy a loaf of bread. [image] is a scene in Berlin, Germany, in 1932, where a boy exchanges a cartload of banknotes for a loaf of bread.
In Asia, stock market crashes have also exacerbated contradictions and conflicts at home and abroad. Taking advantage of China's weakness and chaos, Japan launched a war of aggression against China, occupied the three northeastern provinces, and further expanded into northern and central China. Chinese people fought heroically against Japan, but they also paid great sacrifices.
These are some of the effects of the global economic crisis triggered by the stock market crash of 1929. You may also be wondering, how did this crisis end? What lessons does it leave us?
In fact, the crisis did not end quickly, but lasted for more than a decade, until the outbreak of the Second World War. The crisis has also left us with many lessons.