Another factor was an ongoing agricultural recession: Farmers struggled to make an annual profit to keep their businesses afloat. Be on the lookout for your Britannica newsletter to get trusted stories delivered right to your inbox. Many investors and ordinary people lost their entire savings, while numerous banks and companies went bankrupt. That same sense of reckless overconfidence extended to average consumers and small investors, too, leading to an “asset bubble.” The crash happened after a long period of rising market growth that led to consumer overconfidence. The infamous Black Death of 1347–50 principally accounts for the huge losses, but plagues were recurrent, famines frequent, wars incessant, and social tensions high as the Middle Ages ended. They were under the control of the Soviet Union. While the precise cause of the stock market crash of 1929 is often debated among economists, several widely accepted theories exist. The late medieval disasters radically transformed the structures of European society—the ways by which it produced food and goods, distributed income, organized its society and state, and looked at the world. A stock market peak occurred before the crash.During the “Roaring Twenties”, the U.S. economy and the stock market experienced rapid expansion, and stocks hit record highs. That €34bn was added to the Greek debt. At that time, Europe comprised only between one-third and one-half the population it had possessed about 1300. Greek pension funds, which were major private lenders, also suffered terrible losses. Equally relevant issues, such as overpriced shares, public panic, rising bank loans, an agriculture crisis, higher interest rates and a cynical press added to the disarray. As the Jubilee Debt Campaign says: “The bailouts have been for the European financial sector, while passing the debt from being owed to the private sector to the public sector.”, Available for everyone, funded by readers. In contrast, East Germany was allied by the Soviet Union and fell under highly centralized communist rule. This meant companies had to purge their supplies at a loss, and share prices suffered. Announcing our NEW encyclopedia for Kids! Capital could also support the technology required to develop new tools, enabling labourers to work more productively. Changes in shipbuilding and in the development of navigational aids allowed bigger ships to sail with smaller crews over longer distances. Towns achieved a new weight in society; the number of towns counting more than 10,000 inhabitants increased from 125 in about 1300 to 154 in 1500, even as the total population was dropping. Unlike most of Europe, which ran up large budget deficits to protect pensioners and welfare recipients, Athens was then forced to dramatically reduce its deficit by squeezing pensions and cutting the minimum wage. All rights reserved. Under the gold standard, the government can only print as much money as its country has in gold. Unemployment was down, and the automobile industry was booming. A similar type of overconfidence was seen in industries such as manufacturing and agriculture: overproduction led to a glut of items including farm crops, steel, durable goods and iron. Twice a week we compile our most fascinating features and deliver them straight to you. On October 28, dubbed “Black Monday,” the Dow Jones Industrial Average plunged nearly 13 percent. Following the end of world war ii what happened to most of the countries of eastern Europe? There was no single cause for the turmoil.Most economists agree that several, compounding factors led to the stock market crash of 1929. The fall in population forced up wages in the towns and depressed rents in the countryside, as the fewer workers remaining could command a higher “scarcity value.” In contrast, the costs of land and capital fell; both grew relatively more abundant and cheaper as human numbers shrank. But they are reasonably agreed concerning the general nature of these trends. Additionally, the overall economic climate in the United States was healthy in the 1920s. Some believe this agricultural slump affected the financial climate of the country. The market fell another 12 percent the next day, “Black Tuesday.” While the crisis send shock waves across the financial world, there were numerous signs that a stock market crash was coming. With cheaper food, people in both countryside and city could use their higher earnings to diversify and improve their diets—to consume more meat, dairy products, and beverages. FACT CHECK: We strive for accuracy and fairness. © 2020 Guardian News & Media Limited or its affiliated companies. By this time, many ordinary working-class citizens had became interested in stock investments, and some purchased stocks “on margin,” meaning they paid only a small percentage of the value and borrowed the rest from a bank or broker. They were under the control of the Soviet Union. While historians sometimes debate whether the stock market crash of 1929 directly caused the Great Depression, there’s no doubt that it greatly affected the American economy for many years. Most of the money went to the banks that lent Greece funds before the crash. The troika of lenders first stepped in during the spring of 2010 after Athens could no longer afford to finance €310bn borrowed from a wide range of major European banks. This substitution of land and capital for labour can be seen, for example, in the widespread conversions of arable land to pastures; a few shepherds, supplied with capital (sheep) and extensive pastures, could generate a higher return than plowland, intensively farmed by many well-paid labourers. History of Europe - History of Europe - The economic background: The century’s economic expansion owed much to powerful changes that were already under way by 1500. In Paris a wave of executions followed. A soaring, overheated economy that was destined to one day fall likely played a large role.