Crash depression market stock
The great depression was horrible, at the times when worldwide economy was on the downward path. Some of the countries started facing the signs of economic problems in 1928 itself. The main trigger of depression in the United States was the stock market crash of 1929. The depression had affected the performance on the manufacturing sectors of industrialized countries.
The raw material export oriented companies were also badly hit. The international trades reduced to great extent. This resulted into low profit margins across all the sectors and reduced tax revenues. The small business categories which were primarily dependent on heavy industries were affected in higher quantities. The construction activity was at a standstill. The farming and rural areas were also an active part of this depression and had to live with the crash prices on their crops.
The affected countries started recovery on the economic situation after implementing relief programs for a prolonged duration. In most of the parts, the political situation turned in a 180 degrees direction. The democracy system became weak, which led to rise in the dictatorship system. In the United States the great depression started in 1930 and lasted for 8 to 9 years. In this period the stock market prices declined to less than half of their original prices. Nearly eight to nine thousand banks were left with no business to deal with. This also caused huge losses to the common people, because their wealth in the bank account was diminishing quickly. The large numbers of business houses were not able to perform upto the desired level. Therefore the workmen associated with business houses were forced to accept lower salaries. The worst part was the rate of unemployment shot up to twenty five percent and nearly a couple of cores of the population became jobless.
Stock market crash
The whole world suffered the shock waves of the market crash of 1929. In particular it affected the economy of European countries because majority of the European funds came in the USA stock market just before the crash. Investment in European bonds reduced drastically. The banking sector that already had large investments in securities became short of operating funds. In June 1930, the stock prices on USA exchange declined to one fourth of their original price. This resulted in reduction of various market indices.
The American market which was dependent on imports from Europe also contracted to a great extent. In 1930 government introduced high taxes on imports. The import business became worthless. To balance the international economy, it was essential for USA to continue the business of getting goods from foreign countries. The finance generated by this process was meant to repay American loans. The import tax raising act further added the complications on economy recovery. The immediate effect was depreciation of currency. The situation caused the reduction in world trade as a result the economy was forced take a downward trend.
During the great depression, majority of the countries came to the conclusion that international orders may not give appropriate return benefits. The countries tried to keep away their economies by tariffs, import quotas, or a managed currency. One of the unfavorable effects of depression was drastic fall in agricultural prices along with other essential commodities. The farmers were very miserably affected from both sides. The farmers were already under the burden of high debt on account of buying agricultural machinery and over and above they had to face the crises of fall in their crops.
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