The decade after World War I was called the “Roaring Twenties”. It was a time of rebuilding after a great war. Many European countries didn’t have enough money. They had to pay a lot back to the USA because the Americans helped to win the war. Above all, Germany was weak because it had lost the war.
At the same time industries started producing many goods. People bought new inventions, like automobiles, radios and other household goods, but the normal worker didn’t have more money than before. Consumers had to take out loans so that they could buy the things that they didn’t have the money for.
Stock market crash
Many people also bought stocks. For a few years the value of stocks went up quickly. This made people invest even more money because they thought they would become rich very quickly. However, in September 1929 stock prices began to fall and on October 29, 1929 they completely collapsed. This day is known as Black Tuesday, the day the stock market crashed. After this day stocks were worth very little, sometimes even nothing at all.
Many Americans lost all the money they had. Banks collapsed too because the people who had borrowed money were not able to pay it back.
Factories and companies had to close because a large part of the population could not buy goods any more. They had to send most of their workers home. By 1932 about 13 million Americans, one fourth of all workers, were out of work. Those who kept their jobs had to work for little pay.
At that time the USA had no system to help the poor. There was no money for the unemployed and most of them had to wait in breadlines to get food.
Global effects of the economic crisis
The crisis in the USA quickly spread to other countries around the world. Many European countries that traded with America tried to protect their own economy. They put taxes on imports which made foreign goods more expensive. They wanted people to buy the goods that their own country produced.
In 1932 the Americans elected a new president, Franklin D. Roosevelt, a Democrat. He created a new programme to help America and called it The New Deal. The government started creating jobs and brought many people back to work.
End of the Depression
The end of the depression came with the beginning of World War II. In Europe the people of many countries were also looking for new leaders. In Germany a large part of the population supported Adolf Hitler and the Nazi Party. They promised people work and gave them jobs, especially by making more and more weapons. The depression in Germany ended by 1936.
After the attack on Pearl Harbour in 1941, America entered the war. This ended the Great Depression in the USA.