It was the most serious global economic crisis of the 20th century. It all started because of a major imbalance in the US economy. During the 1920s, there was a rapid growth of the stock market in the country, with Americans investing madly in the stock exchanges, believing that they would always remain high. Ordinary citizens sold their homes to buy shares, looking for an easy and, theoretically, safe profit. However, in mid-1929, the country’s economy began to show signs that things were not going so well. The United States entered a recession (decline in economic growth) and many companies had gone into debt during the period of euphoria. In October 1929, given these negative signs, stock prices collapsed, causing the New York Stock Exchange to crash.
The collapse in the American economy soon spread around the world, as the United States had become the main financier of the countries of Europe after the First World War (1914-1918), a conflict that weakened the continent. The crisis also hit Brazil, causing sales of coffee abroad, our main export product at the time, to plummet. “The near bankruptcy of coffee farming increased political tensions, when a military junta deposed President Washington Luís and swore in Getúlio Vargas, leader of the Revolution of 30”, says economist José Menezes Gomes, professor at the Federal University of Maranhão (UFMA).
Europe also felt the political effects of the crisis, as democracy and liberal ideas were discredited, stimulating the emergence of German Nazism and Italian Fascism. The world crisis, born in the United States, began to be overcome there. In 1933, President Franklin Roosevelt launched a program called the New Deal, undertaking major public works projects to promote economic recovery. But the Great Depression would only be definitively ended years later, during World War II (1939-1945).
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– Why is the dollar always changing in value?
– How does the stock market work?
lost decade Collapse of the world economy marked the 1930s
1929
The collapse of the New York Stock Exchange begins the Great Depression. In Brazil, many factories close their doors and almost 2 million workers lose their jobs
1932
Unemployment reaches 25% in Germany. In the United States, industrial production drops to 54% of levels recorded in 1929
1933
Eleven thousand of the 25 thousand banks in the United States are bankrupt. The US government launches the set of reforms known as the New Deal
1936
The crisis ends in Germany thanks to the implementation of major public works and the increase in military spending by the Nazis, who had come to power taking advantage of the Depression
1941
The Great Depression is fully overcome in the United States after the country enters World War II. Military spending also boosts the local economy