Black Tuesday

Today in 1929, the New York Stock Exchange witnesses the dramatic drop in value of its stock prices – costing thousands of investors to lose great sums of money. Commonly held as the cause of the Great Depression, Black Tuesday was only a symptom of a dying economy.

While a tragedy for Europe, World War I had been an economic boom for the United States. Producing war materials and food stuffs had helped the US economy grow. Following the end of the war, the nation immediately suffered a loss of market. No longer did it need to produce for Europe, farmers kept growing mass amounts of food, far outpacing demand. Prices fell and farmers relied on credit and debt to continue to buy more land, produce more goods, and fall further into debt. This, nearly a decade before the Stock Market crash, was the first sign of economic collapse.

The rest of the nation, however, continued to revel in the economic prosperity that war had brought them. Wishing to never again partake in the horrors of war or the complications of European politics, Americans lived a carefree life. Or at least appeared to live such a life. Credit grew in unprecedented ways, Americans far outspent what they could afford. At the same time, Americans heavily invested in the Stock Market. Ticker tape machines, spewing out stock rates, seemingly appeared everywhere – revealing the widespread appeal of stocks. The prices shot up, not realistically depicting their wealth – the bubble grew.

At the same time the US government continued to try to collect its debts from Europe. France, Great Britain, and others had borrowed heavily from the US during war and without collecting war reparations from Germany (shouldered with the burden of sole responsibility for the Great War) could not pay back their debts. At the same time, the US lent money to Germany to help it pay off its reparations and, in essence, the US paid Europe’s debts to itself. This system left much to be desired and masked a weak Western economy.

By 1929, Americans, their government, and Europeans had all fallen into debt. Farmers had been living in poverty for some time now, but other Americans had begun to default on their debt and the bubble was about to burst. The Stock Market crashed revealed what many had been denying for years. Despite only being a symptom, the Crash signaled panic to the rest of the nation and the downward spiral moved forward in full speed. It would take a combination of private, public, and New Deal efforts to steady the economy. And, as many historians have argued, not until after the United States entered World War II did we also pull ourselves out of the Great Depression.

 

Spoils of War, the Lessons of WWI Shape the WWII’s V-E Day

Today in 1945: Victory in Europe Day! The previous day, Germany surrendered to the allies ending World War II in Europe. This began a series of peace conferences.
When World War I, or the Great War as it was known at the time, came to an end, the peace treaties focused punishment. Germany was held responsible for the four-year-long war that had devastated Europe and its inhabitants. Germany was financially responsible and required to pay off the war debts. Not surprisingly, they were unable to make such expensive payments and defaulted on their loans. The U.S. loaned Germany some money that allowed Germany to pay other European nations back. These European nations then used this money to pay the U.S. back, so essentially the U.S. was paying its own loans. The detriment that this debt caused Germany to become, some have argued (including myself), susceptible to a leader like Hitler and the Nazi party. This of course led directly to the second World War.
In the World War II peace treaties, despite protests from countries like France who wanted to reap the benefits of victory (although they fell to Germany within a matter of a few weeks), the decision was made to not hold Germany financially responsible. Instead, Germany was divided into four parts, with the U.S., Great Britain, France, and the Soviet Union each receiving leadership of one part. This will eventually lead to the creation of West Germany and East Germany.
After World War I, Wilson persuaded the leaders to create the League of Nations. This group of counties (the U.S. excluded, as Congress did not ratify its entry) was supposed to link the world together and prevent future world wars. However, it lacked any real power, as was seen in the 1930s with respect to Germany and Japan’s actions. The Big Three (U.S., Great Britain, & U.S.S.R) at the WWII conferences also recognized this problem. They instead created the United Nations and included a Security Council that could actual enforce its rules. Unlike the the League of Nations, the U.N. retains its power (though limited at times) until this day.
This was not the end of the second World War, Japan would not surrender until August 1945, after the dropping of two atomic bombs. But this day marked the beginning of our modern global community.