Chapter 530： The Great Depression has begun

After finishing his vacation, Edel was refreshed and returned to Bucharest in early summer.

Edel, who returned to the capital, immediately fell into work, and he did not urge the government to do the infrastructure plan before. And after he returned to the capital, Romania's huge sum of 900 million U.S. dollars has also been transferred back to the country, and Edel, who was in his pocket, has nothing to worry about.

The days passed slowly, until one day in September, a guard hurried in when he was busy.

"Your Majesty, this is a telegram from the United States."

When Edel heard that it was a telegram from the United States, he immediately took it and read it. There is no other content in this telegram, only news about the U.S. stock market. With a few words written on it, the New York stock market fell 46 points on September 5, and 13 million shares were traded throughout the day.

Don't think that this decline is not high, you have to know that the current Wall Street stock market closed at only 391 points the day before. This is a drop of nearly 12% in one day, triggering a panic in the market. That day happened to be Thursday, so this is also called Black Thursday.

"Is this the beginning of the Great Depression?"

Edel couldn't help it.

As Edel thought about it, the United States was also shocked by the stock market crash. Among them, the White House gave a speech on the decline in New York's stock market, and the new President Hoover declared that the current US economy is normal and the economic structure is functioning well.

Mellon, the Minister of Finance, also spoke to the newspaper in a high-profile manner. Now there is no reason to worry, this boom will continue.

However, the speeches of senior White House officials did not seem to boost confidence in the stock market. The U.S. stock market continued to fall the next day after the market opened. Although the decline was even higher than the previous day, its momentum was unstoppable at first glance. On that day, the Wall Street stock market fell again by 51 points, already below the 300-point mark. This made the market wailing, and many people suffered heavy losses due to this.

The decline in the Wall Street stock market has caused people to suffer heavy losses, and at this time they especially hope that a hero can come forward to rescue the market. The last hero who rescued the market, Morgan was so highly expected. The newspapers all hope that the king of Wall Street gold financing can save the stock market from falling. Of course, Morgan, who has high hopes, also hopes to save the stock market. The hope of the people makes Morgan unable to refuse.

Therefore, in the case of people calling for it, Wall Street Capital, represented by Morgan, chose the rescue. Because if the financial market falls into recession, the income of Wall Street capitalists will also drop sharply. As for later generations, some people say that this stock market crash has the shadow of Wall Street, which is purely fart. The stock market crash will do more harm than good to Wall Street, and it is not normal if it is not saved.

However, they also underestimated the power of this stock market decline, and the billions of capital they carried were overwhelmed by the surging wave without even seeing a wave. So far, the momentum of the stock market crash can no longer be stopped, and no one can tell when the decline will end.

The decline in the stock market has made many losses compounded, and many people have invested their entire wealth in the previously prosperous stock market. This falling wave made them impoverished, and many people could not stand the huge blow and chose to end their lives. During that time, many pedestrians in New York dared not approach buildings such as high-rise hotels. Maybe a figure fell from the top and made a loud bang to end his life. According to statistics, during this period of time, on average, thousands of people in New York ended their lives by shooting, jumping from buildings, or jumping into rivers every month.

The Manhattan Bridge and the Brooklyn Bridge have become the mecca of suicide. Many people who were impoverished in the stock market fell into the sea wearing only decent clothes.

The fall in the stock market also quickly affected the economy, and many companies suffered heavy losses in the fall in the stock market. These are all fascinated by the booming stock market and misappropriated company funds to the stock market in an attempt to make a fortune. But they, like those housewives, suffered heavy losses in the wave of the stock market decline and left their businesses in trouble. Layoffs and bankruptcies have also become the norm for American companies during this period.

A total of 30 billion US dollars of wealth disappeared in just two weeks after the crash began on September 5. At this time, the US GDP was only 103.6 billion U.S. dollars. It can be said that the US lost 30% of its GDP in two weeks. After that, it was not until the outbreak of World War II that the US GDP returned to the level before the Great Depression.

The main reason is the imbalance of the domestic economy and overproduction.

From 1920 to 1929, the hourly wage of workers rose by only 2%, while the productivity of workers in the factory soared by 55%. At the same time, the actual income of farmers is also declining due to the continuous decline in the prices of agricultural products, the rising taxes and living expenses. In 1910, the income of each farm worker was less than 40% of the income of non-farm workers, and by 1930, this proportion had fallen below 30%. This poverty in rural areas is a serious problem, because at that time the agricultural population accounted for one-fifth of the total population.

In the 1920s, there were already a number of trends that were neglected or ignored at the time that were not conducive to economic development. However, agriculture has never fully recovered from the post-war depression, and farmers have always been poor during this period. In addition, the so-called high wage level in the industrial sector, many of which are false. In the past ten years, the application of new machines has squeezed out a large number of workers.

For example, from 1920 to 1929, the total industrial output value increased by almost 50%, but the number of industrial workers did not increase, and the number of workers in the transportation industry actually decreased. In service industries where wages are very low, workers have increased the most, which undoubtedly includes many skilled workers who have lost their jobs due to technological progress. Therefore, those statistics that indicate a slight increase in wages do not seem to reflect the true situation. Since the workers and peasants are basic consumers, these two types of people will have an impact on the consumer goods market when they encounter economic difficulties.

Under these circumstances, the expansion of advertising and the increase in installment credit sales in the 1920s would have undesirable consequences. Installment credit sales are striving to expand the consumer goods market.

From 1924 to 1929, installment sales increased from approximately US$2 billion to US$3.5 billion, which shows that the growth rate was astonishing. Undoubtedly, the use of installment credit sales increased the sales of durable consumer goods such as cars, radios, furniture, and household electrical appliances.

However, the promotion and use of the installment sales method also shows the fact that without increasing loans, the consumer goods market will not be able to accommodate a large number of products produced by the industrial sector. Moreover, from an economic point of view, this method of selling and lending itself conceives certain dangers; as long as consumer credit is reduced, that is, instalment credit sales, consumer purchases are likely to decrease.

In addition, the influx of a large amount of capital into the United States has also caused this situation. In the 1920s, because many countries paid war debts, money continued to flow into the United States; the United States' gold reserves increased from $1.924 billion to $4.499 billion between 1913 and 1924, which is half of the world's total gold reserves.

And this influx of money cannot find other investment environments and can only be invested in the stock market. The acceleration has pushed up the stock market boom, which has allowed American industrial production to pile up, but the stock market has been extremely prosperous, and it is only strange if there are no problems.

Of course, to make the US stock market explode ahead of schedule, the early withdrawal of capital from Romania also has a certain impact. The withdrawal of 900 million US dollars of funds will inevitably affect the stock market. But for Edel, he doesn't care about the life and death of the American people. Anyway, it's something that is bound to happen, so it's important to save yourself first.