CLIL History

M2 The Big Crash, the Great Depression and the New Deal MATERIALS Black Thursday In the USA the Twenties ended with a series of dramatic events that had huge international repercussions. As the economy had been growing for years the stock market was also booming, because companies and individuals had continuously bought shares with the expectation that they would rise in value and would be sold at a profit. The consequence was that the increasing nominal value of the securities did not correspond to the real one. This practice of wild speculation was possible because there was no form of control by the federal government on the stock market, and on the economic system in general. Consumers preferred to invest their savings in financial speculations rather than buy industrial goods or invest in new industrial plants, equipment, research and training. In 1929 it became clear that agriculture and industry were entering a situation of overproduction. Among the other causes of the market collapse were low wages and the proliferation of debts and mortgages that could not be liquidated. In October 1929 some investors lost confidence in Wall Street, which was the financial district in New York City, and started selling their shares that were dropping in value. Panic caused a wave of sales and on October 24 Black Thursday the New York Stock Exchange collapsed. Savings turned to dust, debts multiplied and the demand for goods crashed. International factors also contributed to the expansion of the crisis. The USA had provided Germany with loans to pay war reparations to Britain, France and Italy. The Europeans used the same money to buy American products and pay their war debts to the USA. After the Wall Street crash in 1929 , the Americans withdrew their economic support to the Germans. As a result the post-conflict reconstruction of Germany slowed down, the ex American allies could no longer repay their debts to the USA and the demand for American products in international markets drastically decreased. These facNew York Stock Exchange, 24 October 1929. tors contributed even further to the crisis. ACTIVITY 4.A Match the following words to their meanings. 1. stock a. money lent at interest 2. share b. articles of commerce; merchandise 3. securities c. suddenly collapsed 4. savings d. the total of shares of a particular company 5. goods e. declining in value 6. wages f. money that is put aside, usually in a bank 7. mortgages g. 8. dropping one of the equal parts into which the capital stock of a corporation is divided 9. crashed h. money loaned to buy a house 10. loans i. certificates attesting property of shares j. money that is regularly paid or received for work 19