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March 24, 2016 | Author: | Posted in american history, history

The triggering event that led to the Wall Street stock market crash in October 1929 was the result of a steady decline in production , prices and income over the period of three months . Anxiety gave rise to panic thus resulting to the crash . The stock market crash affected various countries and the effects were intense . The depression affected greatly the United States because of the absence of welfare benefits for the laid off workers . Between 1929 and 1933 , money income fell by 53 percent and as a consequence , demand fell significantly , which in [banner_entry_middle]

turn led to lower production and more lay-offs up to 25 percent rate of unemployment in 1933 . And yet despite the severity of the stock market crash , the Federal Reserve did not pursue a monetary expansion policy which would have stimulated the economy through lower interest rates and increased the stock of money in circulation . As part of the efforts of the United States to cope with the Depression , the Hawley Smoot Tariff of 1930 was enacted which made US more protectionist than ever thereby sending import duties to record highs . As a result , other countries retaliated as the new tariff act hastened the downfall of American trade volume . Since President Hoover has been protective of the tariff act , he failed to see the results of the move

Immediately thereafter , the Depression spread through out the world especially in Europe . Particularly affected was Germany whose economy was unable to cope with the slow disappearance of American capital . It is also worth discussing that Germany was still paying reparations for World War I which made its position even more delicate . Germany was then forced to borrow from Great Britain and France . The country had to pursue deficienary policies in to gain the confidence of investors and attract foreign funds . The problem of devaluation further posed a major problem . Although the United Kingdom was not hit in the same way as Germany , it however experienced a notable decline in its export which was even greater than the decrease in its imports . Latin America was also greatly affected as it depended heavily in selling raw materials in the US . It could not be surmised that the Wall Street crash was the immediate cause of the decline in world trade . The decline in world trade was largely due to the protectionist legislation passed by major trading nations

When Hoover was replaced by President Roosevelt in 1932 and brought with him the New Deal which was intended to provide direct relief recovery and financial reform to the country suffering from the Great Depression . One of Roosevelt ‘s primary programs was to deal with the country ‘s banking catastrophe . Since one-fifth of all of the banks in the US were forced to close and many people were already starting to lose their life savings , Roosevelt asked Congress to legislate a law which will protect the saver ‘s investment in times of the same crisis This eventually restored the people ‘s trust in… [banner_entry_footer]

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