Affects Of The Wall Street Crash example essay topic

'The 1929 Wall Street Market crash had a significant political, social and economic implications for all countries in the western world. ' To what extent do you agree with this statement? Argue your case with particular reference Great Britain, Germany, Italy, Japan, Russia and USA. The crash of the Wall Street stock exchange had significant political, social and economic consequences in numerous countries. However, the depression that followed the crash did not affect every country and was not solely caused by the fall of the stock market. Many countries had still not recovered socially, politically or economically from World War I, which had a significant impact on the downfall of the New York Stock Exchange.

Countries such as Russia because of their political system were untouched by the devastating effects of the crash such as poverty and radical politics whereas other countries history was to be made because of it. The American financiers were the most powerful in the world because the Entente countries depended on loans from the USA to fund their war effort. During the 1920's most sectors of the American economy grew. From 1922, shares on the New York stock exchange rose in value, this rise continued for eight years afterwards. However, the boom could not last forever and in 1929 the Federal Reserve Board said that it was unwise for banks to lend money for speculation. It was on Thursday October 24 1929, 'Black Thursday', that the crash began with 12.9 million shares being sold by the end of the day.

Investor's losses were estimated at $26 billion. The stock market had crashed due to over-production, more goods were being produced than people could afford. In addition many countries were yet to recover from the First World War. In 1928 the overall demand for agricultural and industrial goods as well as construction work declined.

It was due to this decline that triggered the large amount of share selling on the stock market. However there were other underlying reasons as to why the New York Stock Exchange crashed. After WWI many countries failed to adapt from wartime requirements to those of peace. In Britain, industrial plants failed to do so leaving the country heavily in debt. Another problem caused by the First World War was that of inflation. Governments printed more money in order to purchase military supplies causing each note to be worth less and prices to rise, Between 1913 and 1920 wages in Britain rose three-fold however the purchasing power of these wages rose only 9 per cent.

Germany was another country that was severely affected by inflation (Appendix 1) due to shortages, an excess of imports over exports and of government expenditure over income. Germany was also largely in debt as the Treaty of Versailles declared that the war had been Germany's fault and that they should pay for the damage caused. Due to this Germany's economy suffered from having to pay reparations, relying on loans from America to do so. Therefore because of this dependency the world economy was extensively intertwined with America's economy. As John Keynes, a British economist said, "When America sneezed, the rest of the world caught a cold". The Wall Street Crash had devastating social affects.

Unemployment figures dramatically increased leaving millions in a state of poverty. The effects of unemployment were widespread throughout the world, affecting 14 million workers in American, 6 million in Germany and 2.7 million in Great Britain. Middle class families were forced to sell their homes, if no buyers were found the family had to take to the streets. Italy was extremely hard hit.

In 1935 there was still no sign of recovery. Unemployment was among the highest in Europe and the standard of living among the lowest. Due to this dire situation welfare services were swamped. Social tensions increased developing a rising intolerance of 'economic rivals'.

Many minority groups were used as scapegoats in a bid to lay blame for the extensive hardship the people were suffering. In Germany it was the Jewish people that were outcast from society because of their so-called inferiority. Hitler preyed on the Jewish community using them as a means of developing his political power. The difference between men and women also heightened. Married women in Britain and Germany were forced from the work place by legislation because they were said to be 'double earners' as their husbands also had an income.

In some cases women were the preferred sex to hire because they were cheaper to employ and more prepared to work part-time. Malnutrition was yet another widespread affect of the depression. Japan, due to its rising population began to import food but found they could not pay for it therefore leaving its people with little available food and a rise in prices. In contradiction to this, Russia however did not suffer from such social consequences, as it was not affected by the depression.

This was because of the country's political system, which had led to its seclusion from foreign affairs. Russia's industrial production actually increased because of this with many people around the world starting to view Communism as favourable. The atmosphere of despair and unrest lead to dramatic political consequences. Economic suffering had made people demand governments to take strong measures to stop further economic decline. People lost confidence in democracy, socialism and capitalism.

The depression had the most influential political consequences in countries whose governments were least secure, and strengthened the already strong. Governments that failed to fight the depression caused domestic politics to become chaotic. In the Weimar Republic moderate parties such as the Liberals and Conservatives failed to introduce new policies, which lead to extremist parties winning over the peoples vote. As a result nationalism increased. This was a result of the people's discontent. Society was unstable therefore the people wanted strong leaders such as Hitler and Mussolini to provide the community with order and structure.

Leaders such as Hitler used racial prejudice as a means of attracting voters. However the Nazis did succeed in developing a strong following because they reduced unemployment figures, this was largely due to their re-armament campaign. Similar discontent towards the Japanese government grew with riots occurring as well as the popularity of the Communist party growing. In Italy the Fascist dictatorship led by Mussolini also failed to fulfil its promise of economic prosperity leading to extensive discontent.

However America did not succumb to political extremism despite being the most affected by the depression although Hoover's inability to ease the effects of the depression led to criticism. The Wall Street Crash had many economic implications. The countries that were affected severely by the crash were those that relied on American loans. This shows that it was not the Wall Street crash alone that had caused the depression.

When the Stock Market crashed America could no longer afford to lend money, leaving countries such as Germany in financial difficulty. The situation in Germany was made worse because of the reparations they had to pay as a consequence for having started World War I. Due to this Germany had suffered from inflation making the affects of the Wall Street Crash even more devastating. International economy was greatly affected by the lack of trade. Countries began to impose tariffs on imports to protect domestic production. As a result worldwide production fell by 40% by the end of 1933.

Many third-world exports of raw materials were hard hit. However New Zealand remained relatively sheltered because the prices of meat and dairy products remained steady. The value of currencies throughout the world, especially in Britain and Germany dropped. At the height of the crisis the US$1 was worth $4.2 trillion marks. Businesses all over the world collapsed due to the lack of demand for goods.

In Japan the silk industry was especially hard hit. One third of Japan's export earnings came from the silk industry. This had a devastating affect on the farmers and the economy. Most governments implemented new taxes to help pay for the desperately needed welfare services.

In America under the New Deal program, The Civilian Conservation Corps ( ) was set up. The was set up to aid unmarried men by supplying them with jobs. In exchange they received food, clothing, shelter and $30-a-month wage. In Italy the implemented reforms managed to save the country from bankruptcy. However not all countries were affected by the Wall Street crash. Russia was barley affected by the depression because the country itself was outside the international banking system and its economy was self-sufficient.

Sweden did suffer from the depression in the beginning but overcame its effects. This was due to the country being politically strong and stable. The coalition of the Farmers' Party and the Social Democrats achieved this by introducing a number of policies, for example, regulating the working hours of agricultural workers and unemployment insurance. In conclusion the Wall Street crash had extensive political, social and economic consequences leaving millions of people worldwide unemployed and living in poverty.

However it was not the Wall Street crash alone that caused these difficulties but was the final stage in a long line of situations that led to the depression. American loans and reparations as well as the subsequent failure to recover from World War I were the factors that underpinned the crash of 1929. The consequences of the depression were so serve in some countries especially Germany that hostile political parties gained power which in turn led to the outbreak of World War II. Having said this, not all countries were affected by the crash and the severity of which countries were affected varied greatly. Peacock, H. (1982) A History of Modern Europe 1789-1981 (7th edition), Heinemann Educational Books Ltd., London, England Collier, M. & Pedler, P. (2000) Germany 1919-45, Heinemann Educational Publishers, Oxford, England Thomson, D. (1957) Europe Since Napoleon, Pelican Books Ltd., Harmondsworth, England Er gang, R. (1967) Europe Since Waterloo (3rd edition), D. C Heath and Company, Lexington, United States of America Grenville, J. (2000) A History Of The World In The Twentieth Century (Eulangeol edition), The Belknap Press of Harvard University Press: Cambridge, Massachusetts Over, R. (1982) The Nazi Economy Recovery 1932-1938, The Macmillan Press Ltd., London, England Ross, S. (1997) Causes And Consequences Of The Great Depression, Evans Brothers Limited, London, England Nishi, D. (2001) The Great Depression, Dover Publications, San Diego, United States of America Broom an, J. (1996) Germany 1918-45: Democracy and Dictatorship, Addison Wesley Longman, Essex, England, p. 30.