The Great Depression, whose spectre hovers amid the economic turbulence caused by the coronavirus pandemic, started with an unprecedented stock market crash in the United States in 1929.
The October 1929 crash plunged the world into a decade-long economic and financial crisis, which caused years of mass unemployment and misery across capitalist economies.
The depression also saw the rise of fascism in Italy and Germany, where Adolf Hitler was elected in 1933, which heralded the onset of World War II.
– Wall Street crash –
The 1929 crisis, symbolised by the Wall Street crash, was caused by a slowdown in American growth, protectionist measures by the main world powers and tensions in Europe following World War I.
The 1929 crash followed a speculative bubble during which millions of ordinary Americans had been persuaded to buy shares, often in property investments, that turned out to be worthless.
On Thursday, October 24 the New York stock exchange went into free fall as the number of traders seeking to dump the dud shares was so great, and the day became known as "Black Thursday."
Panic set in and the Dow Jones lost 22.6 percent of its value over several hours, and thousands of investors were ruined.
Overall, between $7-9 nine billion went up in thin air in a single day. The stock exchange collapsed 30 percent in October and 50 percent in November. In the following years it sank even further.
Countless Americans saw most or all of their wealth evaporate.
The "Roaring Twenties", as the period had come to be called, screeched to an abrupt end.
"Black Thursday" had a domino effect in financial markets around the world, starting with London. Europe was badly hit, as American banks demanded the immediate repayment of loans given for post World War I reconstruction.
– Recession, mass unemployment –
What had started with bad days on the stock markets quickly turned into an intense international economic crisis, the worst the capitalist world has ever seen.
In the spring of 1930, the United States entered recession.
Industrial production dropped by half from 1929 to 1932 and the jobless rate shot up to 24 percent from 3.1 percent. By March 1933, half of the US working population was out of a job — 15 million people.
Due to the economic power of the United States, the Great Depression infected the rest of the western economy.
In France, industrial production fell from the benchmark of 100 in 1929 to 89 in 1932 and only recovered in 1939. The number of jobless went from 12,000 in late 1930 to nearly 175,000 six years later.
– New deal –
With the United States mired in crisis for nearly four years, new Democratic President Franklin D. Roosevelt put forward a "New Deal", aimed at boosting the economy to counter the collapsing income of farmers, falling prices and industrial production and unemployment.
The plan had a dual objective: first to remedy the crisis by relaunching consumption and investment, then, in the longer term, reforming the American economic system.
The US in the 30s adopted policies which cut government spending, encouraged devaluations and set up protectionist barriers against trade.
Economic stimulus activities put forward by British economist John Maynard Keynes bore fruit and the "New Deal" relaunched the American economy from 1935. However, in 1939 the country still had nine million unemployed.
Although World War II from 1939-1945 devastated large parts of Europe and Asia, post-war reconstruction reversed the economic tide, bringing three decades of growth in jobs, trade and stock markets.
© Agence France-Presse