The Great Depression affected the world because banks gave a steady, low interest, but people wanted to make more than what the banks had to offer and it became very popular to put your savings into the stock market since at the time it was rising throughout the 20's because of all the spending that was happening. In reality, there was an over production of goods taking place. So the companies ran out of people to sell their products to. They had to cut back on workers and wages. Once people did not have the jobs that earned them money to pay back the companies they had bought items from, they took their "savings" from the stocks. On October 24th 1929, there was a slight drop in the Dow, (Dow Jones Industrial Average is basically the average of the price in share of the biggest 30 companies) and people started panicking and sold off billions in stock. People wanted to take all of their money out of the banks at once because the stock was tumbling downward, but the banks didn't have the money that belonged to everyone stored up in vaults. They were using it to give loans to different people. More and more people caught the hysteria of selling all of their stock to get what little value they could out of them. By Oct. 29th the market had lost 30 billion dollars and no one would buy a worthless stock with what little or no money people possessed in their pockets. One thing just led to another. The depression followed because people were stuck trying to pay off their debts and businesses couldn't sell anything since no one was buying. A quarter of the population was out of work then, since no one had the money to hire.
This affected the rest of the world because foreign goods could not be sold due to high import taxes the government put on goods in order to help pay off their debts. In WWI the allied forces bought weapons and other supplies for the war that was never paid off so they were in debt as well since they could not pay the U.S. back because no one was buying.
http://www.youtube.com/watch?v=IWrX6kC9Nhs
This affected the rest of the world because foreign goods could not be sold due to high import taxes the government put on goods in order to help pay off their debts. In WWI the allied forces bought weapons and other supplies for the war that was never paid off so they were in debt as well since they could not pay the U.S. back because no one was buying.
http://www.youtube.com/watch?v=IWrX6kC9Nhs