Great depression 6
Great depression 6The great depression from 1929 and into the 1930's, is the period in modern times with the largest unemployment, and the highest frequencies of bankruptcies. But can one from this say that "the Great Depression" was a breakdown of capitalism? Or was it simply an economic low-point that had to follow the prosperous 20's?
In the 1920's everything seemed to be running smoothly over the whole world. People had a good time and business prospered. Lots of new inventions were introduced such as the first planes, the radio and many families got hold of a refrigerators. In the more wealthy families they even had washing machines and vacuum cleaners. As the 20's were coming to an end, over 20 million Americans had cars. During the 1920's there was a free market where all was manufactured from the play of supply and demand on the world marked. The whole production was based on credit, promise to pay in the future. The system was based on mutual confidence and exchange. The economy was dependent on foreign loans, and government expenditure was dangerously high, with businesses suffering from low profit margins. The world believed that the great expansion, as in the early 20's, would continue and with all the new inventions life would become pure joy and happiness. Sales, profits and wages went through the roof.
The acute phase of the Great Depression began in October 1929, on "the Black Friday", with the Wall Street Crash and continued through the early 1930s. The stock marked crash was not the cause of the depression, but a symptom of a problem whose real causes lay much deeper. Some of them even so fare away from Wall Street, as the farmers of eastern Europe, After share prices plunged on Wall Street in 1929 the US banks began to call in their foreign loans. They had also loaned money to many people who as a result of the Crash could not repay it. Meanwhile, those who had money on deposit at the bank began to withdraw it. Without enough money to pay depositors, many banks collapsed. A shortage of cash meant that there was less money to invest in industry and less money to be spent on industrial and farm products. Many banks had to close down, and were the mere symbol of how terrifying the depression was. The first bank...
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