The Great Depression (1929)
FoundationThe 1929 Wall Street Crash triggered a global depression: banks failed, factories closed, unemployment soared. Nations raised tariff walls, making it worse — extreme political movements exploited the misery.
- 1929 crash → global Depression
- Recalled loans + tariff wars spread the pain
- Economic collapse → extremist politics
§Text Passage
1The prosperity of 1920s America rested on fragile foundations: investors could buy shares with only a ten per cent margin, credit expanded beyond control, and share prices drifted far from real business values; industry over-produced while workers' incomes lagged, wealth concentrated in few hands, and the bubble swelled ever larger.
2In October 1929 the Wall Street stock market collapsed and panic selling became unstoppable; banks failed in waves under depositors' runs and savings vanished, firms starved of credit went bankrupt one after another, and unemployment climbed to about a quarter of the workforce. The crash spread from the financial market into the whole real economy.
3The crisis swept the world: American banks recalled overseas loans, hitting Germany — whose recovery depended on American capital — first and hardest; the United States raised tariffs sharply, other countries retaliated in turn, and world trade shrank drastically. National economies were so interlocked that one collapse dragged down the rest.
4The economic disaster shook democratic politics: in Germany six million were jobless and the Nazi Party, campaigning on jobs and revenge, took power in 1933; in Japan rural distress let the military gain the upper hand. The Great Depression thus became the breeding ground of extremism and the Second World War.
1Summary 重點摘要
The 1929 Wall Street Crash triggered a global depression: banks failed, factories closed, unemployment soared. Nations raised tariff walls, making it worse — extreme political movements exploited the misery.
2Vocabulary cards Vocabulary
The October 1929 US stock market collapse.
The global slump of the 1930s: mass unemployment, bankruptcies, shrinking trade.
A tax on imports; the tariff wars of the 1930s made things worse.
Share of jobless workers; the US hit ~25%.
Borrowing to buy shares in the hope prices would only rise — the speculative mania of the 1920s inflated the stock bubble.
Factories making more than consumers could buy: goods went unsold, prices fell, and firms had to cut jobs or close.
Shielding home industries behind high tariffs; mutual retaliation shrank world trade even further.
After the crash, panicked withdrawals toppled banks, wiping out savings and freezing credit.
3Step by step Steps
- CausesThe prosperity of 1920s America rested on fragile foundations: investors could buy shares with only a ten per cent margin, credit expanded beyond control, and share prices drifted far from real business values; factories over-produced while ordinary purchasing power lagged; farm goods went unsold and farmers fell into chronic debt; and wealth concentrated in relatively few hands. The speculative bubble swelled until it was ready to burst.
- CrashOn 'Black Thursday', 24 October 1929, share prices plunged and panic selling became unstoppable; thousands of banks failed under depositors' runs and savings vanished; starved of credit, firms cut jobs or collapsed one after another, and unemployment climbed to about a quarter of the workforce. The crash spread from the financial market into the whole real economy, sinking America into a prolonged depression.
- Global spreadThe depression swept the world: American banks recalled overseas loans to save themselves, hitting Germany — whose recovery depended on American capital — first and hardest; the Smoot-Hawley Tariff of 1930 raised American duties sharply, and country after country retaliated, shrinking world trade drastically. National economies were so interlocked that one collapse dragged down the rest, and Europe and Latin America sank together.
- Political falloutThe economic disaster shook democratic politics: in Germany six million were jobless and, amid boiling anger, the Nazi Party campaigned on 'jobs and revenge' and took power in 1933; in Japan rural distress and political turmoil let the military gain the upper hand and steer the country toward expansion; the prestige of democratic governments in Britain and France sank. The Great Depression thus became the breeding ground of extremism and the Second World War.
- The illusion of prosperityThe boom of the 1920s was built on borrowed money: shares could be bought with only a ten per cent margin, everyone believed prices could only rise, and firms and households borrowed freely to consume and invest. Production kept expanding, but workers' real incomes failed to keep pace with output, leaving surplus goods without buyers. Share prices had drifted clean away from real business — the 'prosperity' was an inflating bubble whose bursting was only a matter of time.
- The price of protectionismIn 1930 the United States passed the Smoot-Hawley Tariff Act, pushing duties on a vast range of goods toward historic highs. Meant to protect home industry, it drew retaliation from country after country in new tariffs and quotas. World trade shrank drastically within a few years, over-production in exporting nations worsened, and the depression grew deeper and longer. Protectionism proved to magnify one country's crisis into a global disaster — a lesson with echoes to this day.
4Diagrams Diagrams
5Worked example Example
Why did a US stock crash transform German politics?
- Post-WWI Germany rebuilt on US loans (Dawes Plan)
- The crash meant loans were recalled → German economy collapsed
- 6 million unemployed, anger everywhere
- Hitler's Nazis surged on promises of jobs and scrapping the treaty
- 1933: Hitler became Chancellor
- Answer: Because the world economy was interlocked: post-WWI Germany rebuilt on American loans (the Dawes Plan from 1924), and after the crash US banks recalled them — the German economy collapsed and six million were jobless; amid the fury, the Nazis campaigned on jobs and tearing up Versailles, leaping from a fringe party to the largest in the Reichstag, and Hitler was appointed Chancellor in 1933. Economic collapse thus became the breeding ground of extremist politics.
6Common mistakes Mistakes
7Quick check Quick check
Q1What event started the Depression, and when?
Q2How did the Depression help Hitler rise?
Q3Why did tariff walls make things worse?
Q4Which event triggered the Great Depression?
Q5How did President Roosevelt respond to the Depression?
8Recap Recap
- 1929 crash → global Depression
- Recalled loans + tariff wars spread the pain
- Economic collapse → extremist politics
- Causes: speculation, easy credit, overproduction, unequal wealth
- 6 million jobless in Germany → Hitler takes power in 1933