Economic impact

Economic impact - Background of great depression

• october 24th 1929 new york stock exchange had fall in share prices became known as “black thursday”, followed by another collapse on 29th oct, most comp went bankrupt workers lost jobs banks topped lending money.

• For G wall street crash had profound impact on economy, society and political system.

Economic impact- How did it affect G

• G econ had been stagnating since 1928 as investment decreased G econ recovery in years 1924-28 had been largely financed by USA loans but in aftermath of wall street crash loans dried up

• make matters worse- American bankers that lent money on short-term loans demanded immediate repayment, at a time where G econ needed more investment to stimulate econ, money being withdrawn

• USA been largest overseas market for G manufactured goods but depression drastically reduced demand for imported goods in USA and G export trade declined rapidly.

• between 1929-32, G export trade declined by 61% and its industrial production fell by 58% of 1928 level,

• resulted in G economy entered deep depression.

Economic Impact- how did depression affect other countries?

• affected other countries, G suffer greater fall in industrial production than other european countries

• In Britain, decline in industrial production between 1929-32 was 11%,

• as g forgein trade collapsed and prices fell, many companies had no alternative but to declare themselves bankrupt and make workers redundant,

• even companies that survived had to reduce their workforces and cut hours and wages of those workers who continued working.

• banks also began to get into difficulties as cust withdrew money and outstanding loans not repaid,

• following collapse of an austrian bankers in may 1931, G banking system plunged into crisis.

• july 1931= gov closed banks and stock exchange for two days to provide financial system w some breathing space, measures gave temp respite

• dep deepened became more prolonged and economic conditions for millions of germans became more desperate.

Economic impact- unemployment

• unemployment increased, by 1932 abt 1/3 of all G workers were registered as unemployed

• official figures didnt reflect true scale as only registered

• been estimated true number in jan 1933= 8 million

• impact of great dep fell heavy on main industrial areas, ruhr n silesia,

• white collar workers were also badly hit. in civil service were severe cuts in workforce and reductions to salaries

• farming also badly hit, struggled even during so called “golden age”, dep push into serious difficulty

• prices collapsed, exports of agricultural produce declined and sales of food fell as g had less money to spend.