TOPICS - 1929 Crisis
Keywords:
- Great Depression
- New York Stock Exchange Crash
- Overproduction
- Underconsumption
- Stock Market Crash
- New Deal
- Hoovervilles
- Dust Bowl
- Protectionism
Key Questions:
- What triggered the 1929 Stock Market Crash?
- How did overproduction affect the US economy?
- How did the crisis spread globally?
- What measures were taken by the US government to combat the crisis?
- What were the social and economic consequences of the crisis?
Crucial Topics:
- The role of financial speculation in the economic collapse.
- The relationship between the 1929 crisis and the post-World War I period.
- Actions of Herbert Hoover's government in response to the crisis.
- Impact of the crisis on the agricultural and industrial sectors.
- The influence of the crisis on American foreign policy and the rise of authoritarian ideologies.
Specificities by areas of knowledge:
Meanings:
- Great Depression: Period of significant economic decline that began in 1929 and extended through the 1930s.
- New Deal: Set of economic policies implemented by President Franklin D. Roosevelt to recover the US economy.
- Dust Bowl: Series of dust storms that hit the central plains of the US, exacerbating agricultural problems during the Depression.
- Protectionism: Economic policy of restricting imports from other countries through tariffs and quotas to protect local businesses and jobs.
NOTES - 1929 Crisis
Key Terms
- Great Depression: It was the period of the greatest economic crisis of the 20th century, which generated massive unemployment, production decline, and deflation. It originated with the New York Stock Exchange crash in 1929 and extended throughout the 1930s.
- New York Stock Exchange Crash: Occurred in October 1929, this event marked the beginning of the Great Depression due to the collapse of stock prices, which reverberated in the global economy.
- Overproduction: Economic phenomenon where the supply of products exceeds demand, especially in the US in the 1920s, leading to price and profit falls, and contributing to economic crises.
- Underconsumption: Situation where the consumption capacity of populations is below what the economy can produce, often associated with overproduction.
- New Deal: Set of programs and economic reforms implemented by President Franklin D. Roosevelt from 1933 to combat the effects of the Great Depression.
- Hoovervilles: Name given to shantytowns and slums in the US where homeless people from the 1929 crisis lived; refers to President Hoover, criticized at the time for his inadequate response to the crisis.
- Dust Bowl: Ecological and agricultural crisis that hit the US plains in the 1930s, leading to massive migrations due to dust storms and soil degradation.
- Protectionism: Policy of raising tariffs and creating regulations to restrict external imports in order to protect national industries, a common practice during the Great Depression.
Main Ideas and Concepts
- The stock market crash was preceded by an economic euphoria, with excessive speculation and easy credit, leading to an overinflated stock market.
- Overproduction, along with a lack of economic diversification, left economies vulnerable to external shocks like the crash.
- The collapse of the stock market accelerated the withdrawal of foreign investments and the reduction in consumption, affecting economies around the world.
- The crisis generated a series of protectionist policies, which exacerbated the decline in international trade and deepened the global depression.
Topic Contents
- Financial Speculation and Crash: The economic boom of the 1920s led to risky investments and an artificial increase in stock prices. When the market realized that the prices were disconnected from the real values of the companies, it sold shares massively, resulting in the crash.
- Post-War Overproduction: The US, flourishing after World War I, increased production to meet European demand. After the war, Europe recovered its productive capacity, and consumption did not keep up with the supply in the US, resulting in overproduction.
- Global Spread of the Crisis: The American economy was intrinsically linked to various nations through loans and trade. The crisis in the US reverberated, causing capital withdrawals and economic collapses in other countries.
Examples and Cases
- New York Stock Exchange Crash: Analyze "Black Thursday" (October 24, 1929) and "Black Tuesday" (October 29, 1929), when panic sold millions of shares, and prices plummeted.
- New Deal: Study the policies of the New Deal such as the creation of Social Security and banking reforms, which sought to reform and recover the economy, while providing relief to the unemployed and poor.
- Protectionism: Evaluate how the Hawley-Smoot Tariff of 1930, raising tariffs on imports to record levels, resulted in retaliation from other countries and a significant reduction in global trade.
SUMMARY - 1929 Crisis
Summary of the most relevant points:
- Origin of the Crisis: The Great Depression began with the crash of the New York Stock Exchange in 1929, triggered by excessive financial speculation and a stock bubble that burst.
- Expansion and Overproduction: During the 1920s, the US experienced an economic expansion fueled by the demand of a post-war world, resulting in overproduction.
- Global Consequences: The crisis in the US reverberated worldwide, affecting other economies, mainly due to the financial and commercial interconnectedness of the time.
- New Deal: The policies of the New Deal, implemented by Roosevelt, aimed at economic recovery through financial regulation, unemployment support, and consumption stimulus.
Conclusions:
- The New York Stock Exchange crash and overproduction were crucial catalysts for the Great Depression.
- The post-World War I economy, marked by loans and international trade, amplified the impact of the crisis.
- The New Deal was essential in mitigating the effects of the crisis, establishing a new paradigm of state intervention in the economy.
- Protectionist measures, such as the Hawley-Smoot Tariff, exacerbated the crisis by significantly reducing global trade.
- The crisis had profound social implications, including mass unemployment and the emergence of impoverished communities, known as Hoovervilles.
