Nyelvtanulás | Angol » Piti Noémi - Great depression

Piti Noémi 12.a Great Depression Great Depression was a severe economic decline in the 1930s. It had devastating effects in every country. In many countries, the negative effects of the Great Depression lasted until the end of World War II. There are several theories about what cause it, most of which puts the blame on overproduction. One of these claims that during the Great War, the USA produced most of the goods needed in Europe. This increasing demand created a higher output of American economy However, by 1929, the European economy has recovered. taking markets from the US, which resulted in overproduction. According to Marxist theory, there is an inner contradiction within the capitalist economy. In order to gain more profit, the capitalist entrepenuer wants to sell as many goods as he can and pay as low wages as possible. As a result, the workers, who make up the most of society, won’t have enough money to buy the products which results in overproduction. Also, monopolies

keep prices artifically high which again results in overproduction. During the boom of the 1920s, more and more people wanted to get rich on the stock market. The growing demand for stocks pushed the prices up while the actual economic results began to worsen. When this became clear to investors, the psychological mood changed, causing the Wall Street Crash. ’Black Thursday’ happened on the 24th October 1929. The prices of stocks suddenly fell by 40-60 % on the Wall Street Stock Exchange which was the financial centre of the world. Because of this, all brokers wanted to sell stocks, but no one wanted to buy them. This caused hysteria which led to the collapse of the banking system All the depositors wanted to take money out of their accounts, because they did not feel they could trust in banks, so banks went bankrupt. As they were the greatest investors, the capital had to be withdrawn from investments. It led to an industrial crisis, as both manufacturing goods and mining raw

materials were greatly reduced. An agricultural crisis also began because there was no demand for agricultural goods that could be backed by money. All of these led to the collapse of the whole financial and commercial word, because European inter-war reconstruction largely depended on American loans. There were social and political consequences of the Great Depression. Because of the crisis, smeller companies went bankrupt. They were bought up by the bigger and stronger corporations, so concentration of capital took place. 1 Piti Noémi 12.a Unemployment rates were extremely high, e.g in the USA it was around 25 %, while in Germany the rates were around 40-50 %. The market of both agricultural and industrial good became even narrower and worsened the situation. Many famer went bankrupt, as without income that came from selling their goods, farmers were unable to repay the state loans. The jobless millions demanded fundamental economic and political changes which helped the rise

of radical parties all over the world, but mostly in those countries which lost in the Great War, i.e Germany, Italy or Spain However, those who were on the winner side could survive the crisis. 2