![]() ![]() German manufacturers consequently endured a sharp downturn in export sales. To compound the problem, the United States, at that point the largest purchaser of German industrial exports, put up tariff barriers to protect its own companies. But by the early 1930s, there was little demand for their products while capital and credit were almost impossible to obtain. German industrialists enjoyed prosperous times in the second half of the 1920s, thanks to foreign investment. In 1931, there were runs on German and Austrian financial institutions and several major banks folded. Banks struggled to provide money and credit, and consumers lost confidence in them. These loans ceased in late 1929, while many American financiers began to ‘call in’ outstanding foreign loans.Įven after five years of recovery, the German economy was not resilient enough to withstand significant withdrawals of cash and capital. Germans were not so much reliant on production or exports as they were on American loans, which had propped up the Weimar economy since 1924. This collapse had profound effects on American society but the impact on Weimar Germany was worse, and for different reasons. Hundreds of banks closed and many people lost their savings and pensions. The collapse in economic confidence also led to runs on banks, as people rushed to withdraw cash. By 1932, more than 12 million Americans or 24 per cent of workers were out of a job. The most visible outcome of the Depression was mass unemployment. Many companies were bankrupted or ceased trading those that stayed in business released workers to cut costs. Between 19, American industrial production fell by 45 per cent. The economic and social effects of the Wall Street crash were disastrous. This downward trend continued for three weeks, with share prices falling each day. As more stock went on the market, share prices plummeted, leading to further panic-selling as shareowners rushed to minimise their losses. Share prices on the New York stock exchange began to fall rapidly, sparking a rush of selling. The bubble burst on October 24th 1929, later described as ‘Black Thursday’. By 1928, there was considerable over-production in many American industries, leading to declining sales and falling profits. These dramatic increases in profits and share prices could not be sustained forever. Thousands of Americans rushed to take advantage of the share market, many using their life savings or borrowing against their assets to take advantage of the boom. These profits were passed onto shareholders, who also benefited from sharp increases in share prices. The 1920s had been a boom decade for American companies, which tallied up record production figures, skyrocketing sales and millions of dollars profit. The prelude to the Great Depression occurred in the United States, which had enjoyed years of prosperity and inflated confidence. ![]()
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