00:00They were just listening to Felipe, who is with us and today he comes to talk about a topic that I think is not very well known, at least in Argentina, and that had worldwide significance, right?
00:12The crash or crisis of 1929. How are you, Felipe? How are you? How are you, King?
00:18Indeed, on a day like today, October 24, 1929, which was a Thursday, just imagine what a coincidence, the famous Black Thursday on Wall Street, the collapse of the American economy, unexpected, of course, which has to do with what happened during World War I and after World War I, right?
00:37The United States entered World War I late, entering in 1917, when the war was already decided, it was going to be the big winner, because the war was not fought on its territory.
00:50So after the victory, it became the big creditor of undefeated winners.
00:54Uh, during the war, countries had not been able to develop their industries, which clearly turned to the war industry, so they were countries that were very willing to receive American exports of goods and services, right?
01:10So the United States became the great world power in the 1920s, almost replacing Great Britain in hegemony, right?
01:16The dollar began to have more importance than the pound.
01:20The United States experienced the crazy years, the years of jazz, of Charleston.
01:26Even the state had to take measures such as prohibition, because there was a kind of social chaos.
01:32People began to satisfy their consumer needs, they bought refrigerators, cars, houses, well, not yet televisions, but radios, everything there was.
01:41And, uh, it also happened that European economies suffered because of these repair costs that they had to pay, for example, for reconstruction, and then there began to be a problem of overproduction and a drop in consumption.
01:57Domestic consumption declined because basic needs were met, and exports were difficult because Europe did not have the money to continue buying American products at the same level.
02:06So what happened with this enormous flow that the American economy was producing?
02:11It was poured into the speculative market.
02:14On the one hand, land in Florida, Miami, and that entire area, which also had a limit, and on the other hand, investment in the stock market, for which American banks were very generous and told middle-class people to invest all their savings, but they also gave them credit to invest in the stock market.
02:30As a result, an enormous bubble began to emerge from 1927 to 1928.
02:41It coincided with the rise to power of the Republican Huber, a very conservative economist, right?
02:45And well, there came a time when everyone had money in the stock market.
02:48The stock market produced extraordinary profits.
02:50You could earn 100% from one year to the next.
02:53It was crazy in the United States in dollars, right?
02:56Uh, a very nice article by Groucho Marx that talks about his adventures in the stock market, that he didn't understand anything about pipes or steel, but that he had become an investor until one day.
03:10Well, no.
03:11Uh, what happened?
03:12What was happening?
03:13Economic analysts began to say by mid-1929, watch out, the value of shares has nothing to do with the value of companies.
03:23In some cases, 5 to 10%.
03:25You know that shares are like little pieces of the company, right?
03:30Share coupons are part of the capital stock of a company.
03:33In this case, we were at 5, 6, and sometimes 10 times the real value of the company.
03:39Quote.
03:40This was noticed by the big investors who said, hey, stop, this is a, Rockefeller said it.
03:46This is a house of cards, let's start getting out.
03:49Quote.
03:50This began to happen in October.
03:51The big investors began to leave.
03:54The snowball effect that will explode on Thursday, October 24, 2029, occurs when 12 million shares are sold, this is a million in dollars.
04:03Banks begin to go bankrupt because no one will pay them what they should have paid because the stock market crashes.
04:10Well, it is an absolute disaster.
04:12There are 2,000 companies that go bankrupt, mainly banks, manufacturing companies, and the situation in the countryside is very bad.
04:19A real disaster that, of course, will have repercussions on the entire world economy.
04:24Note that at that time, the United States produced 42.5% of all the world's industrial products, right?
04:32Almost half of the world's industrial production was American, with a presence throughout the world.
04:37So, obviously, the crisis is going to affect the entire world.
04:41In the United States, President Huber is not getting anywhere.
04:44He is applying very classic economic recipes, firing public employees, reducing spending, well, all that causes even more disaster.
04:53And the change was only going to begin in 1932 with the arrival of Roosevelt, who was somewhat in line with this rising economist, Keynes.
05:02Who had warned about this in that extraordinary book that I always recommend, The Economic Effects of Peace, Right?
05:08Where he says, what will happen to countries after the war, particularly in Europe?
05:13And watch out for Germany, which is being subjected to war reparations that are impossible to pay and that, of course, will not be paid by the warlords of the First World War, but rather by the German people, and this could have very serious consequences, right?
05:27Look, look at what happened.
05:30Exactly.
05:31Well, this.
05:32Keynes is the one who was hated by my law and not because he proposes his intervention, the intervention of the state, and well, Roosevelt is going to take those Keynesian recipes literally with the plan of the welfare state, let's say, right?
05:46The welfare state, as it's called, the new economy that Roosevelt proposed, which is a strong intervention by the state, credits for agriculture, which was in very bad shape, this, expansion of employment with an impressive public works plan, uh, well, credits for housing, a state investment that didn't go bankrupt.
06:06The American state didn't go bankrupt in 29, it bankrupted private enterprise.
06:12The state was saved and was in a position to help private enterprise.
06:16What happened to Rubel?
06:17Well, they called him a communist, they said a lot of things to him.
06:21The guy had to change the composition of the court to do this, because the Supreme Court, which was made up of conservatives, blocked all these progressive measures that Thibault was proposing, right?
06:31So that was the solution that the United States found.
06:36Each country would deal with the crisis in a different way.
06:40Germany and of course, Germany would come with Nazism directly as the proposal for a strong state, but well, with completely different characteristics.
06:49And in Argentina, the crisis led to the coup d'etat of this counter-revolution, right?
06:54One of the consequences of this crisis was going to strongly affect primary production, especially because England, which was our hegemonic power, unilaterally reduced our commodities by 40%.
07:05Imagine the people who had taken out a loan to plant crops.
07:09The number of farmers who went bankrupt, the number of laborers who were left without work, and on the other hand, the Argentine state ran out of money to continue importing.
07:17Therefore, the famous import substitution process began, manufacturing here what we used to buy abroad.
07:24Therefore, there was a double process, right?
07:27Migration from the countryside to the city, and in the city there was employment, there began to be employment, right?
07:33For everyone, but more employment for those people who came to work in the new factories that were beginning to be installed in the city.
07:39A global upheaval that had repercussions throughout the world.
07:42The Soviet Union was somewhat spared because it was not part of this context, but the vast majority of countries suffered tremendously from this crisis that would take a long time to recover.
07:53The United States began to recover strongly from 1935 or 1936, right?
07:58Argentina took a little longer, and well, each country would have its own.
08:03And of course, the strongest cases were Germany, which ended this monster.
08:07With the rise of Adolf, exactly, very much supported by German capital, right?
08:13Let's always remember, yes, yes, the great concentrated capital of Germany.
08:17Superb.
08:17Uh, I was telling him off the microphone and I'll tell you if you're interested in the subject.
08:21There is a literary approach by an Argentine named Hernán Díaz with a book called Fortuna.
08:27It's a bit dry at first, but when you realize the narrative mechanism is something extraordinary.
08:32It's a superb book that tells the inside story of the crisis of 1929 that Felipe Pina just told you about.
08:41So today, October 24th, is a Thursday.
08:44Exactly.
08:45A Thursday.
08:46Thursday.
08:46Awesome.
08:47Thank you, Felipe.
08:48Felipe Pina in the vast minority.
08:51M.
08:51M.
08:51M.
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