The Big Crisis in 1929 happened about eighty years ago. Many experts believe that having a similarity between the present crisis and that chaotic in 1929.

What happened in 1929?

In October 1929, Stocks in Wall St went down rapidly in price after growing very fast in 1920’s.

Only after two days, Dow Jones Index reduce 25% (ending in the Gloomy Tuesday, 29/10/1929).

The number of transaction in market reached the new record after 40 years ago.

Before setting a new record in July 1932, Dow Jones Index decreased 89% and it cannot restore to the previous level in 1929 until 1954.

The reason of crisis

Nowadays, experts argue about the reason of this Crisis.

When the price of stock increased four times in the previous decade, and that have enough features to recognize the market formed the bubble.

The speculation with a large-scale took form at the 1920’s. And only in 1929, Market set a new record with a large amount of stocks: 1.124.800.410 stocks which were traded in NYSE market. To the beginning of 1928 from September 1929, Dow Jones Index was 191 scores, increasing to 38139 scores. Nobody can skip that profit.

The investing-bank experts, agencies, transacted experts and some people who owned stock gathered to increase the price of stocks and after that, they sold all of stocks to make profit. The tricks which they usually used is buying and selling the mutual types of stock which were less noticed, and after transaction, they increased that price a little bit.

Americans waited a line to receive the social assistance in New York 1932.-picture

The stock speculation was rised highly in 1929.

The Central Bank lowered the interest rate to the lowest level in 7 years.

The Big Crisis in USA 1929-1933 have a main reason from the collapse of banking system. Some economic researchers believe that in the period 1929-1933 maybe America only stood out the light depression which comply with the real business cycles.

And at that time if FED make a mistake which was the slow response to rescue the banking system.

The effect of crisis

When the stock price reduced rapidly, investors who invest much money to stock market recognized their terrible loss and got into a state of panic.

With many investors and share brokers, this situation is very terrible.

The rumour about people was suicidal began to spread out quickly.

Depositors waited for a long time in front of bank in 1933.

Although many rumours were magnified but actually have suicidal people in order to escape from the business crisis.

When the Business slack and smash spread out the other branches in United State, the unemployed increased to 13 million and the sign “Don’t need worker” appeared everywhere.

The consultant experts Russel Bickell recalled: “In that time, many people borrowed and lent much before the market collapsed, similar to today, anybody is extremely happy”.

He said: “People earn much money but suddenly, everything is changed.

When he was 17 years old, Mr Bickell worked in the commission house at Reading Town in Pennsylvania.

The Big Crisis at Wall St impacted highly on American economic growth and finally, this affect spread out the world.

American Economic went down strongly, employed rate came to 25%, and many other people cut the work-time.

The banking system shakes strongly, the first action of Roosevelt President when started his tenure is closing all of bank in two week to check the banking accounting book.

Don’t have unemployment benefit, the wage decreased and many factories closed.

Many experts believed that The policy-making body make the crisis serious by sewing the monetary policy and balancing physical budget when the crisis happened seriously.

The homeless man stoop in the chilly wind

The Data Sheet of Cosequence of Big Crisis

13 million unemployed people

Industrial output reduce to 45% to 1929 from 1932

A new house reduce 80% to 1929 from 1932

To 1929 from 1921, 5000 banks went bankrupt

What did solutions bring out?

At first, the policy-making people tried to recover the communal beliefs by a discussion calm market’s nerves, Herbert Hoover make people believe that their economic went better.

The all of things had changed after Franklin D Rooservelt President became a USA president in 1932, and government interfered to take off the plan of out-of-work benefits for the citizens, and stabilize market by limiting manufacturing and promoting Social security programme.

Unemployed man lie down at the harbour in New York 1935

However, Government of Roosevelt did not have many successes in restoring economic growth and belief got a low level.

Finally, how did the problem solve?

The Big Crisis lasted a long times regardless of many measures about the mitigation of citizen’s damage, namely supplying more works and supporting or protecting the hypothecation.

Until the beginning of The World War II, when the USA government applied the Keynes’s Economic Theory with focus on the role of wage rising ( to rise aggregate supply) and the role of government in the controlling economic, the economic has recovered.

The Manufactured output doubled in World War, The unemployment disappeared when woman and Blacks appealed to join the labor force for millions of people who joined army.

In the pinnacle, USA government funded a half of necessary amount of money to pay for War.