90. The Great Depression and Hitler

In January 1929, when President Herbert Hoover was inaugurated, the stock market soared to extraordinary levels, earning the name the Hoover Bull Market.

The stock market was already undergoing rapid growth before that, as new investors, especially the general public and small investors, were entering.

The euphoria peaked in August 1929, before falling rapidly in October of the same year. Actually, share prices started declining in September, but on October 18, the market plummeted sharply. The frantic rush to buy stocks was quickly replaced by an equally frantic rush to sell. 

October 24, known as Black Thursday, marks the start of real panic. However, the Dow only fell 6 points as some banks and investment firms bought large blocks of stock, successfully stopping the panic that day. 

Their efforts, however, ultimately failed to strengthen the market for long.

The real panic began on October 28, the Black Monday, when the market closed down 12.8 percent. 

Then came Black Tuesday on October 29, when the Dow dropped another 12 percent. 

This marked the start of the Great Depression, a worldwide economic decline that lasted roughly ten years until 1939. It continued until World War II began, affecting both industrialized and non-industrialized nations worldwide.

Although it began in the US, the Great Depression caused significant declines in production, widespread unemployment, and steep deflation in almost every country. 

President Hoover appeared on TV, assuring the public that business was fundamentally sound and that a great revival of prosperity was just around the corner, but it had no effect.

In early 1930, people were surprised as the Dow approached the 300 mark again, but it quickly fell in May. It took another two decades for the Dow to surpass 200 points.

The big question is what factors suddenly led to the stock market's collapse. 

First of all, it was the rampant speculation. The stock market has its own definition of the word 'speculation'.

For those unfamiliar, margin money is a common term in the market. Investors who bought shares on margin not only saw their investments fall in value but also owed money to lenders who funded their share purchases.

There is nothing more to say about this 95-year-old event; however, I would like to note that the Great Crash of the stock market and the Great Depression are two distinct events. 

Although the decrease in stock prices mainly caused the reductions in production and employment.

The Great Depression had a significant economic impact, leading to widespread human suffering. The unemployment rate exceeded 20 percent at its peak, and industrial production in the U.S. fell by 47 percent, while real GDP declined by 30 percent. 

Remember that the Depression was not limited to the US; it affected nearly every country around the globe to differing degrees. 

I do not exaggerate when I say that the event brought Hitler to Germany.

The reason was that, at that time, the German economy was quite fragile due to its heavy reliance on foreign capital. Most loans originated from the United States. 

When these loans matured all at once and the international market for German exports collapsed, the efficient German industrial system quickly came to a standstill. 

As a result, thousands of workers were laid off, banks failed across Germany, and inflation soon set in, making it difficult for people to buy essentials with devalued money. 

Hitler, who was already appealing to disgruntled World War I veterans, gained even greater reasons and a larger population to address.

Meanwhile, political drama in Germany reached its peak, with one event triggering the next. 

The German people were already weary of suffering, misery, and watching their leaders struggle for dominance. Hitler gained their backing by promising to address all their issues, and he managed to rise to power through democratic methods.

The rest is history.