• 1929 crisis

    The 1929 crisis causes<o:p></o:p>




       We are going to see why in 1929 , the world had known the largest and most important economic depression of the 20th century.<o:p></o:p>

     The causes of the Great Depression are still a matter of active debate among economists ,so I won’t be able to explain these in details.But let's try! Main economic events that took place during the Great Depression were : a deflation in asset and commodity prices, dramatic drops in demand and credit, and disruption of trade, ultimately resulting in poverty and unemployment. So let’s talk about the cause of the 1929 crisis.<o:p></o:p>


       First ,the American economy in the 1920s was a prosperous one. World had reasons to be optimistic. Industrial production, in particular in the automobile sector, was booming.
       Then the US economy –and therefore the world’s- had begun to slow down in the middle of the 1920s, even before the stock market crash . 
       And in 1927, with economic growth came frantic speculation. 577 million stocks were bought and sold on the New York Stock Exchange. The following year,in 1928, 920 million stocks were exchanged on Wall Street. 
       Morover, in the 1920s, the prosperous economy made it easier to contract a credit loan. Financial speculation attracted many would-be traders. So at the time, it was possible to pay only 10% of a stock option to acquire it, and borrow the 90% remaining. Those 90% were the target of most speculations. When the clockwork stopped ticking in 1929,courtiers turned to small shareholders asking them to pay back the 90% loan, driving many to bankruptcy. 
       Letting people get into debt by buying assets whose value was artificial weakened the stock market.
       At the time, markets lost 489% in fourteen months. First the epicenter of the crisis was the New York stock market ,and then the crisis extended itself to the entire world.                                                                                   After Black Thursday, October 24th 1929, several smaller scares hit markets from 1930 to 1933. Nine thousand banks, that is 15% of the deposits in the banking system, disappeared in three years.
       So American recession really began to hurt world population between 1930 and 1935, with massive unemployment.<o:p></o:p>

        By May 1930, prices began to decline, but wages held steady in 1930,and then began to drop in 1931. Conditions were worse in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs. The decline in the US economy was the factor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better.          Countries tried to protect themselves by protectionism , but the effect of protetionism  wasn’t good .<o:p></o:p>

       By late in 1930, a steady decline set in which reached bottom by March 1933.

        To conclude , I'll say that the crisis began with a stock market crisis ,then continue with a financial crisis(drop of consumption loan, bank difficulties ) , a production crisis(drop of consumption, of production, of prices and wages)  and finish with a social crisis (rise of unemployment , demonstrations ).
       Then the world economy started to rebuild itself thanks to the help of politician like for exemple in America Roosevelt and his New deal.


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