TASK 2: THE CRISIS OF 1929 AND THE GREAT DEPRESION (1929-1939)

1. An abrupt end to prosperity (1929-1933)

 Roaring Twenties economic boom: increase the speculative financial operations and credit expansion on the stock
market without sufficient repayment guarantees, set the stage for the abrupt end to prosperity.
 The Stock Market Crash:
o Overvaluation of the New York Stock Exchange without productive backup: Pyramidal Scheme Fraud.
o Black Thursday (October 24, 1929): Panic and massive selling of shares
o Black Tuesday (October 29, 1929): Collapse of the Wall Street.
o Consequences:
 Loss of company value and capital
 Transformation of saving into unpayable debts
 Bankruptcies and closure of banks and the productive companies financed by them.
 Unemployment benefits who could reduce some of the problems.
 End of the ‘’Roaring Twenties’’ due to the global impact:
 Worldwide repercussions
 Cancelation of US loans affecting many European countries.
 Emergence of the Great Depression
2. Measures to Overcome the Great Depression (1933-1939): differences between affected countries:
 Industrialized countries (USA, UK, Austria, Germany, France, etc.): economic nationalism and state
intervention with different grades.
o UK: Devaluation of the pound by 25%, who increased unemployment, and shift from free trade to
protectionism: international trade regulations establishing customs tariffs on imports to favour the
country’s own industry.
o USA: introduction of President Roosevelt’s ‘’New Deal’’ in 1933 based on Keynesian ideas who
defended limited state intervention, enforcing public works, subsidies, banking control, and social
welfare.
o Germany and Italy authoritarian measures and ideology to address the economic crisis.
 Autarchism: Self-sufficiency focused trade and economic policies implementation,
reducing the dependence on foreign countries in key sector (agriculture, military, industry,
scientific technic research, and innovation).
 Large-scale public works: projects to address unemployment and stimulate economic
activity.
 Corporatism: bringing together employers and workers under the strict state control over
economic activities, guiding the toward military and ideological goals.
 Agricultural modernization development
 Big industrial military complex creation.
 Expansionism to divert population attention from socioeconomic challenges.
 Impact on countries exporting raw materials (Brazil, Argentina, Chile, India, Malaysia, Australia, etc.)
o Fall in commodity prices and reduction of exports to industrialized countries: unsold stocks,
unemployment and decline in profits.
 International attempted solutions: trade agreements between countries