The Great Depression

When was the Wall Street Crash?

October 1929

How was the Great Depression caused?

Some Americans bought shares in successful American companies after the USA had grown rich after WW1 through manufacturing goods like cars and fridges. The Americans buying these shared hoped to make a profit by selling them later after the company had developed and expanded. Some people even took loans from banks in order to join this trend. However, when the Wall Street Crash happened, many Americans hadn’t made as much as they had hoped for or as much as they had bought them for. To reduce their losses, most Americans decided to sell their shares as quickly as possible. However, when more people sold their shares, the value decreased further - a problem that exacerbated itself as more people sold their shares out of fear that they would depreciate further. Since the shareholders hadn’t made more money than they’d spent (and most lost some money), they were unable to pay the banks back for their initial loans, so they were left ruined as the banks were forced to repossess houses and cars in order to recover potential losses.

How was the Great Depression caused worldwide?

As many Americans couldn’t afford to buy new goods at all due to their losses of houses and cars, firms went out of business, which caused millions of Americans to lose their jobs and therefore not be able to spend money on goods, further causing the problem. The whole world was impacted as many banks had loaned to other countries - which they recalled in an effort to not go bankrupt

Why was Germany impacted?

This impacted Germany especially hard because many loans had been made by American banks to Germany (as part of the Dawes and Young Plans), which Germany couldn’t afford to return. In an attempt to gather the money, Germany recalled money from German businesses, many of which went bust as a result. This caused many Germans to lose their jobs and many became unemployed and homeless. At the same time, there had been a banking crisis as people attended to collect their money that they had stored in banks, causing several of these to go bankrupt too.

How did unemployment change during the Great Depression?

It rose from 1.3 million to 6.1 million between September 1929 and January 1933

What percentage of Germans were unemployed due to the Great Depression?

33% (1 in 3)