Stock Market Crash- Between the two World Wars, the major worldwide event was the Great Depression, an event for which the seeds were sown by the First world War and which in turn contributed to many of the forces that would lead to World War II. The Great Depression in the 1930s signaled a world economic disorder that was difficult for the various countries of the world to weather and that presented them with a problem they only dimly understood. Had the nations of the world understood what was happening better, they might have avoided the coming war with a more sound economic policy. Between 1924 and 1929 there was an immense expansion in international loans, but this was not accompanied by a corresponding increase in production, employment, and the international exchange of goods. The era came to an end in a new era of financial failures, and the Great Depression set in produced an era of economic nationalism more intense than had been seen before. The Depression had different effects in different countries and affected different parts of the world more or less severely, but taken altogether the forces unleashed would collide over the decade of the 1930s to produce political as well as economic dislocation and tension.
The Great Depression started with the stock market crash in 1929. This came after a period of massive buying of stocks as people rushed to get in on the perceived economic boom of the late 1920s, a boom that proved illusory:
The stock market crash of 1929, which marked the beginning of the Great Depression of the United States, came directly from wild speculation which collapsed and brought the whole economy down with it (Zinn 377).
In the months before the crash, there was widespread speculation. Some economists warned that this boom could not last and that the prices of stocks no longer had any relation to the earning power of the corporations that were issuing them. Most Americans refused to li...