Respuesta :
What were some of the economic problems facing the world powers in the 1920s. Specifically, what factors led to the crash of 1929 and the depression that followed is given below
Explanation:
- 1920 the American economy began to contract and the 1920-1921 depression lasted about a year, but a rapid recovery reestablished full-employment by 1923.
- As will be discussed below, the Federal Reserve System’s monetary policy was a major factor in initiating the 1920-1921 depression.
- From 1923 through 1929 growth was much smoother. There was a very mild recession in 1924 and another mild recession in 1927 both of which may be related to oil price shocks (McMillin and Parker, 1994). The 1927 recession was also associated with Henry Ford’s shut-down of all his factories for six months in order to changeover from the Model T to the new Model .
Global Depression
The crash of the U.S. stock market on Black Thursday, 24 October 1929, brought an end to the economic recovery that had marked much of the 1920s. Profound economic problems had existed beneath the surface for years leading up to the crash.
Agriculture suffered from overproduction and falling prices. Many nations were industrially underdeveloped and produced only one type of raw
material, which left them highly susceptible to the boom and bust cycles of the industrial powers.
The United States, Germany, and the former Allied Nations played a dangerous balancing act involving loans, investments, and reparations payments. When the dangerously high prices on the stock market collapsed, the entire house of cards collapsed. With the exception of the Soviet Union, which by-and-large removed itself from the world economy, most of the rest of the world was dragged into the Great Depression.
