Why did the US stock market crash in 1929 affect other nations?
Answer and Explanation:
As a result when the U.S. stock market crashed, marking the start of heavy economic decline, other nations looked to the United States to help reinforce the shaky economic prosperity in Western Europe and other parts of the world. The most immediate foreign effect of the economic crisis occurred in Latin America.
Africa, Asia, Australia, Europe, and North and South America all suffered from the economic collapse. International trade fell 30 percent as nations tried to protect their industries by raising tariffs on imported goods.
What caused the Wall Street crash of 1929? The main cause of the Wall Street crash of 1929 was the long period of speculation that preceded it, during which millions of people invested their savings or borrowed money to buy stocks, pushing prices to unsustainable levels.
Many factors contributed: A decline in prices of primary products devastated the economies of such countries as Argentina, Australia, and Chile. Beginning in 1928, Americans cut back on their investments abroad to capitalize on the booming U.S. stock market.
The U.S. Stock Market Crash in 1929 did affect other nations because they depended on United States investment capital that dried up after the crash. Great Depression and the stock market crash are never far from economic leaders' ideas in determining what to do in more current declines.
The U.S. stock market crash of 1929, an economic downturn in Germany, and financial difficulties in France and Great Britain all coincided to cause a global financial crisis.
The crash frightened investors and consumers. Men and women lost their life savings, feared for their jobs, and worried whether they could pay their bills. Fear and uncertainty reduced purchases of big ticket items, like automobiles, that people bought with credit.
Although there were national variations, no part of Europe was left untouched by the Great Depression. In the worst affected countries – Poland, Germany and Austria – one in five of the population was unemployed, and industrial output fell by over 40 per cent. Levels of trade between countries also collapsed.
Most industrialized countries experienced economic slowdowns of varying severity (notable exceptions were China, India, and Indonesia), and many responded with stimulus packages similar to the ARRA. In some countries the recession had serious political repercussions.
What were the global effects of the US depression?
Although it originated in the United States, the Great Depression caused drastic declines in output, severe unemployment, and acute deflation in almost every country of the world.
Bank failures led ordinary citizens to hoard gold.
As a result, demand for U.S. exports slowed. A slowing economy combined with the stock market crash of 1929 and a subsequent wave of bank failures in 1930 and 1931 led to crippling levels of deflation. Soon, the frightened public began hoarding gold.
How could the Stock Market Crash of 1929 been prevented? Had the Federal Reserve and other governing bodies established a separation of banks and investment firms, the stock market would likely not have become saturated, especially with borrowed money.
The Great Depression and international trade are deeply linked, with the decline in the stock markets affecting consumption and production in various countries. This slowed international trade, which in turn exacerbated the depression.
In terms of the value of world trade, Africa suffered less from the Depression than other parts of the world. Whereas the value of world exports declined by 66 percent from 1929 to 1934, the value of African exports declined only by 48 percent. Agriculturists were affected by this drop in value more than mine owners.
All Asian countries were deeply affected by the steep fall of agrarian prices that began in 1930 and reached its lowest point around 1933. There was a slight upward trend in subsequent years, but in general, prices stagnated at a low level until they rose again during World War II .
Devastating effects were seen in both rich and poor countries with falling personal income, prices, tax revenues, and profits. International trade fell by more than 50%, unemployment in the U.S. rose to 23% and in some countries rose as high as 33%.
- Germany.
- Russia.
- Japan.
- India.
The economic troubles of the 1930s were worldwide in scope and effect. Economic instability led to political instability in many parts of the world. Political chaos, in turn, gave rise to dictatorial regimes such as Adolf Hitler's in Germany and the military's in Japan.
As stocks continued to fall during the early 1930s, businesses failed, and unemployment rose dramatically. By 1932, one of every four workers was unemployed. Banks failed and life savings were lost, leaving many Americans destitute. With no job and no savings, thousands of Americans lost their homes.
Who got rich during the Great Depression?
Not everyone, however, lost money during the worst economic downturn in American history. Business titans such as William Boeing and Walter Chrysler actually grew their fortunes during the Great Depression.
Europe and the rest of the world were also badly hit, and while they first called the crisis 'a slump', in time the label 'Great Depression' was adopted on both sides of the Atlantic to describe this unprecedented global economic crisis.
The stock market crash of October 1929 led directly to the Great Depression in Europe. When stocks plummeted on the New York Stock Exchange, the world noticed immediately.
So, they experienced the Great Economic Depression during the 1930s. It affected the USA and Europe. Standard of living dropped, unemployment increased, and industries also saw stagnancy. It also led to a rise of excessive nationalism in Germany and other European countries.
Of 198 Countries, compared on the percentage change in GDP between 2007 and 2009, the most impacted countries are predominantly Eastern European and trade-dependent advanced economies.
