The Wall Street Crash

The Wall Street Crash

- In 1929 the value of shares on the New York stock exchange on Wall Street collapsed.

- Many businesses in the USA went bankrupt.

- This led to mass unemployment which caused the USA to slip into an economic depression.

- Millions of families went hungry and could not afford the rent on their houses.

- The streets were filled with people desperately searching for work, shelter and food.

Key events from 1929

3rd of October 1929  - Gustav Stresemann dies

24th of October 1929 - 'Black Thursday' in Wall Street Crash

                     - busiest day ever in selling shares on the   

                       stock exchange

                     - Huge falls in share prices

29th of October 1929 - 'Black Tuesday' in Wall Street Crash

                     - More massive falls in share prices

                     - Panic selling with investors selling for

                       anything they could get

From 1929 onwards    - The Great Depression in Germany

What was the Great Depression?

Definition - a long-lasting downtown in the economy that results in unemployment and problems such as difficulty in borrowing money and high interest rates.

Causes of the Great Depression in Germany

- The Wall Street Crash

- Economic depression in the USA

- Germany was required to repay its loans from the USA

DAWES PLAN 1924

YOUNG PLAN 1929

The Wall Street Crash

• October 1929 - share prices fell on Wall Street stock exchange
• Falling shares meant people's investments fell in value
  
• People began selling their shares in the hope of saving their money
• Black Thursday - October 24th 1929 - 13 million shares sold on the stock exchange
• Panic selling sent prices even lower
• Shares worth $20,000 in the morning were worth $1,000 in the evening
• Investors lost $4,000 million in a week
  

Economic Effects

• Banks - major investors in shares - suffered huge losses
• German banks lost so much, people feared they couldn't pay out money in bank accounts
• People rushed to get their money back - some banks ran out of cash
• German/American banks needed the return of money they'd lent to businesses
• German companies were dependant on these loans
• German industrial output fell and unemployment rose
• Worldwide depression disaster for export industries
  
• High unemployment = domestic demand for goods fell too
  

Social and Political Effects

• The middle classes lost savings, their companies or their homes
• Workers became unemployed
• People demanded political action - Weimar government failed them
• 1930-32 - Chancellor Heinrich Bruning
• He suggested:

- raising taxes to pay the cost of unemployment benefit

- reducing unemployment benefit to make payments more affordable

• Right-wing parties, the middle classes and the wealthy opposed higher taxes
• Left-wing parties and the working class opposed lower benefits
• The coalition of parties which Bruning's government depended on collapsed in 1930
• Government (Bruning) could only govern by decree. He relied on 44 decrees in 1931 and 66 in 1932
• Unemployed roamed the streets; some joined the private armies of political parties
• Violent clashes became common
• Bruning lost control of the Reichstag and resigned in 1932, leaving a dangerous power vacuum for a new leader to step into