- Before the famous stock market crash of October 1929, preliminary signals pointed to economic difficulties. In 1926, in the United States, the real estate sector declined. Farmers are encountering great difficulties:European countries are importing less and less, thus leading to overproduction.
- At the beginning of the 1920s, strong speculation took place:bank loans were abundant.
October 1929
Characters
Herbert Hoover
Franklin Roosevelt
Adolf Hitler
Benito Mussolini
Procedure
On October 24, 1929, on Wall Street, millions of bank stocks were sold, which would become "Black Thursday" in stock market history. A large number of shares had been bought on credit during the 1920s:this is the bursting of this speculative bubble. The American stock market lost nearly 27% of its value in one morning, shareholders panicked. The global economy will be contaminated, as evidenced by the bankruptcy of the largest Austrian bank, the Kredit Anstalt of Vienna, May 11, 1931.
This financial crisis aggravates an already established economic crisis:government spending and credit decrease, implying a contraction of the economy. We then enter a period of deflation (fall in prices, wages, and therefore demand, production, and employment). In the United States, industrial production fell by half between 1929 and 1932. Unemployment was strongly impacted:the rate of inactive Americans rose from nearly 3% in 1929 to around 24% in 1933.
Europe was not spared unemployment:Germany was particularly hard hit, with one out of three employees inactive in 1933. Social anger led to popular protests in the industrialized countries:the "hunger marches" which place in the United States are harshly repressed by the police. Unemployed people protest in Britain. The middle classes are also affected and demonstrate:for example in France, on February 6, 1934.
Consequences
- The crisis led to debates on economic issues, but also to political reversals:in the United States, Franklin Roosevelt succeeded President Hoover in 1932. Unlike his predecessor, he notably advocated the intervention of the State, in the logic of Keynesian theories, and launched a policy of major works to fight against the Great Depression called New Deal .
- Mass unemployment leads to a wave of racism:foreign workers are killed in France. In Central Europe, and especially in Germany, anti-Semitism is firmly anchored.
- Isolationism (a policy that limits any intervention in world affairs) is found in more or less all economies:the United States repatriates its loaned capital from the start of the crisis. The rise of totalitarianism is a political consequence of the economic crisis. During the elections of 1932, the Nazi party becomes the most powerful in the German Parliament, and Hitler becomes Chancellor on January 30, 1933.
- In Italy, the cradle of fascism and a country hard hit by the crisis, the Chamber of Deputies was dissolved in 1938.