Effects of the Wall Street Crash

• When did the value of shares in the American stock market collapse?

  October 1929
• What was the effect of the stock market collapse on German banks?

  It caused panic about bank account safety
• What happened to the German Civil Servant Bank during the banking crisis?


  It went bust due to withdrawal queues
• Why did US and German banks demand loans from German businesses?


  To recover losses from their investments
• What was the consequence of businesses cutting back production?

  It led to increased unemployment rates
• How did unemployment affect consumer spending?

  Less money led to reduced purchasing power
• What was the unemployment rate in Germany by the end of 1932?


  Over 6 million
• How much did unemployment rise from September 1929 to the end of 1932?


  From 1.3 million to over 6 million
• What were the key consequences of the banking crash in Germany?

  • Panic about bank account safety
  • Bank failures (e.g., German Civil Servant Bank)
  • Demand for loans from businesses
  • Reduction in production by businesses
  • Increased unemployment rates
  • Decreased consumer spending
• Banks like the German Civil Servant Bank went bust as so many people queued to withdraw their savings. In desperation both US and German banks started demanding loans paid to German businesses which lead to many cutting back production.
• Unemployment rose from 1.3 million in September 1929 to over 6 million by the end of 1932.
• The banking crash now led to unemployment as businesses started reducing costs by sacking workers.