How The Wall Street Crash Of 1929 Triggered World War II

The World War II was a tragedy no one wishes to recall, right? The disastrous period between 1939 to 1945 had seen a massive bloodbath, with millions of people losing their lives globally. But wait, this write up is not going to sound like a boring history class. 

While most of us know that nearly every country was involved in World War II, directly or indirectly, there’s one lesser-known story regarding World War II, which most of you might not be aware of.  

This untold story reveals how the US stock market crash of 1929, which had happened almost after a decade of World War I (1914-1918), was one of the key events that triggered WWII.

Now if you are wondering how that happened, then let us bring to you this interesting and rather seldom talked about connection of the stock market with World War II.

How Did It All Start?

Let us roll back the time a bit to understand how it all started. After the end of World War I (1914-1918), Germany had to pay a huge compensation as remunerations for the war due to the Versailles Treaty. For the unversed, this treaty had helped end World War I, and involved the Germans and other Central Powers to forcefully take the blame for World War I, thus implying loss of territories, reduction in military forces, and reparation payments to Allied powers.

So, coming back to the huge compensation that Germany had to pay after WWI, this could only be paid as gold or foreign currency. And to start paying this after the war, Germany had to borrow huge loans from American Banks, which, coupled with gold depletion, led Germany to increase printing of its currency in an attempt to buy foreign currency. This caused hyperinflation in the year 1923. Simply put, hyperinflation is a term used to describe situations in which the prices of all goods and services rise uncontrollably over a particular time period.

In 1923, Germany was facing a situation in which even a loaf of bread began to cost more than one billion Reichsmark (Germany’s then currency). Things were so bad that people had to burn cash since firewood was costlier! Kids began to play with kites made of money and women made dresses of bank notes, clearly signaling how worthless Germany’s currency had become practically.

Then Came The Stock Market Crash

Then in 1929, things changed, but for the worse. After the stock market crash of the US (which saw the Dow Jones index fall 25% in just four days), the American banks began to call back their loans, and Germany’s already struggling economy, as expected, collapsed. That collapse saw unemployment and poverty skyrocket, and with no option left, people in Germany became desperate.

The Nazis’ Rise Amidst German Economy’s Collapse

As the situation became worse and worse for Germany amidst the economy’s collapse, the Nazis took advantage of this and even people at this desperate point readily accepted the rule of Nazis, as well as their extremist policies.

To put things in perspective, before 1929, the Nazis had already lost 2 elections and secured barely 3.5% votes. But in 1933, the Nazis went on to win 35% of votes, which were enough to form a coalition government.

Then, what followed was an absolute monopoly by the Nazis, including a total control over the media. Ultimately, the Nazi Germany, led by Adolf Hitler, went on to play the central role in World War II. Despite achieving significant military victories initially, the Nazis ultimately faced defeat in the war.

Conclusion

The 1929 crash was not just a Wall Street tragedy, it was a trigger that shook the world. It didn’t just bankrupt investors; it toppled economies, fuelled radical ideologies, and quietly laid the foundation for World War II.

Turns out, money isn’t just numbers on a screen, its power, politics, and history rolled into one. When the markets sneeze, the world catches more than a cold.

Today, the stakes may look different, but the lesson remains: understand financial cycles, or risk being caught in them.

That’s where smarter, more transparent investing platforms like Grip Invest come in, helping you invest with insight, not just instinct.

FAQs About Wall Street Crash Of 1929

1. How did the 1929 stock market crash affect Germany?
The 1929 Wall Street crash led American banks to withdraw loans from Germany, collapsing its fragile economy. This deepened unemployment, hyperinflation, and social unrest, paving the way for the rise of the Nazi party.

2. What is the link between the Great Depression and World War II?
The Great Depression, triggered by the 1929 stock market crash, created global economic instability. In Germany, it led to extreme poverty and political chaos, enabling authoritarian regimes to gain power, ultimately leading to World War II.

3. Can financial crashes lead to global conflicts?
Yes, economic crises can trigger political upheaval, extremism, and geopolitical tensions. The 1929 crash is a classic example of how financial instability can escalate into global conflict if systemic issues remain unresolved.

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