The Roaring Twenties were a time of wealth and excess
Stock prices had reached what seemed like a permanently high plateau
On ‘Black Thursday’ October 24 1929 that all changed
Share prices on the New York Stock Exchange (NYSE) collapsed and continued
to fall rapidly for a month, beginning the a chain of events that led to the
Great Depression
Banks collapse, unemployment and prices rise – FINANCIAL ARMAGEDDON
The countries that had relied on America’s economic prosperity to stay afloat
were now exposed to its economic collapse
A Vicious Cycle
Crash follows a speculative boom –
basically that means there’s no
guarantee you’ll get you r money
back – in the late 1920s.
Hundreds of thousands of
Americans are investing heavily in
the stock market and many of
them are borrowing a lot of money
to do so.
Over $8.5b was out on loan, more
than the entire amount of currency
circulating in America at that
time.
Stock prices continued to rise and
people continued to invest
thinking the rise would never end,
but, of course, it would.
A Vicious Cycle
Investors stood to lose a lot if the
market turned down.
Prices fell by 17% in the six weeks to
Black Tuesday, but then recovered
again.
However, on October 24, they began
to drop dramatically and what
followed was a massive amount of
panic selling, where people tried to
get rid of their shares (12.9 million in
total)
This led to the market crash, and a
loss of $14 billion
People then tried to withdraw their
money from the banks, much of
which was tied up in other
investments, so the banks began to
fall over as well
A Vicious Cycle
Less banks, less lending, hence
more difficult for companies to
borrow capital to make
investments for new projects and
expansions.
Business uncertainty creates job
uncertainty, creates bankruptcy
If you don’t have a job or your job is
under threat you’re not going to
spend as much money, so the
economy suffers.
And, finally, those who have relied
on America; the Germans, French
and British start to suffer economic
collapse as well.
American overseas loans
 Canada $936m
 Latin America $1421m
 Europe $2815m
 Asia Pacific $586m
 Total $5758m
Military solutions to economic
Problems
Rise of dictatorship
Extremists
Germany
•Social Democrat majority
blamed for everything
•Legacy of Treaty of
Versailles and reparations
•Fear of communist
uprising
•The rise of Hitler and the
blame game.
Japan
• Export prices for silk fall
50%, by 1931 half of
factories lie idle
• Conscription of the
unemployed
• Conquer other countries
to make them captive
markets for
Japanese goods
• Invasion of Manchuria
1931
• Rise of fascism
• Parties allied to army
begin to assassinate
politicians
United States
• Continued policy of isolationism to cut costs and
commitments
• Unemployment peaks at 25% in 1933
• 5000 banks fail
• Political realignment brings Franklin Roosevelt to power
in 1932
• Cheap entertainment to help people forget their woes.
Big
band and jazz music, Walt Disney, radio shows.
European powers
Italy
Mussolini looks for national
distractions and blames
the communists for the
mess
Russia
Apparent immunity to the
recession, “validating” the
theory of Marxism
Claim world revolution is at
hand. What might that
mean?
Britain and France
20% of insured workforce
unemployed in UK
Greatly weakened, fear of
communist revolts
Cut backs in government
spending, even on defence,
hence less prepared for
war, or to help each other.
Rise of the socialist Popular
Front in France
Great Depression
cartoons
What is going on
here?
Legacy
• Rise of fascism in Germany, Italy and
Japan
• Rise of Josef Stalin in Russia
• Increase in popularity of extreme
left wing parties and socialism
• Conflict and invasion