History of the economic crises, part ІІ

economic crisis
Economic crisis

The first global crash

The 19th century marked the victorious march of industrialization. Within a few years, the steam engine conquered the factories, and the advent of the railways made possible the movement not only of people, but also of trade goods. New horizons opened in front of the economy and banks began to lend generously. The economic boom reached its climax during the 1850s.

The reversal

Many projects were hastily funded and oftentimes investments were higher than the expected profits. When in 1857, the New York branch of the Ohio Life Insurance and Trust Company declared bankruptcy, because it was embroiled in risky transactions, the evil fell down on everyone. Suddenly the confidence between the New York banks evaporated. They demanded an immediate return of all loans.

Panic and terror

The population, expecting a collapse of the U.S. economy, reacted with panic and besieged the banks to withdraw their investments. With record speed, the bank crisis in the USA carried over Europe, South America and Asia. The first global financial crisis lasted until 1858.

Bankruptcy after bankruptcy

The bubble burst in May 1873 after a courses fall in the Stock Exchange of Vienna. The collapse of the prestigious American bank Jay Cook & Company on September in the same year, once again hit the world economy. Panic covers everyone, the courses of stock markets fall sharply, company after company went bankrupt. The consequences of this crisis were being felt until 1890.

The great depression

On October 29, 1929 New York citizens gathered on Wall Street. The motive: lightning fall of the New York Stock Exchange. However, the “Black Thursday” is only the beginning. It followed certainly the most severe crisis of that times, which entered the history as the “Great Depression.”

How it all started

The reason for the profound crisis of 1929: a long period of mad speculations and infinite debt. After the World War I the economy rapidly recovered and engineering had notable progress. Small and large investors threw into risky transactions, believing that the future will move only forward.

Years of misery

 However, when the bubble burst, it turned out that everyone were affected by the crisis – contractors, banks, farmers, but most of all the ordinary workers. In Germany, for example, between 1929 and 1932 the industry fell by 30 per cent and more than 6 million people remained unemployed. Millions of people were sinking into poverty.

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