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The 1907 Crash
In 1907 panic swept the New York stock exchange. After the failure of Otto Heinze's purchase to corner the stock of United Copper, Otto Heinze's brokerage home was forced to close. During the next three weeks, panic spread all over the nation, local banks and businesses entered bankruptcy. After J.P Morgan's failure to convince New York bankers to pledge large sums of their money to shore up the banking system, the Trust Company of America collapsed on October 23. The next day the New York Stock Exchange was forced to do an early closure. On November 1, New York City declared insolvency and on November 2 Moore & Schley collapsed. The 1907 stock exchange crash caused what would be later known as 'The Great Crisis', a period of economic depression that lasted ten years and devastated the U.S, radically changing its politics and keeping it from taking its place in the international scene. Without American resources due to the crisis the Entente is weakened and the UK loses the naval race to Germany. The crisis didn't affect Germany and it became the first global economy after overtaking the USA and the UK one year after the crash.
The Great War
On June 28 1914, Archduke Franz Ferdinand of Austria was assassinated in Sarajevo by a Serb nationalist triggering the July Crisis. Following an ultimatum on July 28 Austria-Hungary declared war on Serbia, on August 1 Germany declared war on Russia, two days later Germany declared war on France, on August 4 Germany invaded Belgium and the UK declared war on Germany, and finally on August 5 Italy and Spain declared war on the Entente. The Germans quickly overran Belgium and entered in France. After defeating the Entente at the Battle of the Marne, the Germans entered in Paris on September 15. With French troops demoralized and Paris in German hands, France signed an armistice on October 26, in Sedan. With French ports under German control, the British blockade ends. The Germans concentrated on the eastern front and advanced quickly until the Russian Empire collapsed after the October Revolution of 1915. The new republican government signed the Brest-Litovsk Treaty with Germany handing them over Poland, the Baltic countries, Ukraine, Byelorussia, the Caucasus and Finland. In January, the British signed a white peace with Germany. A peace conference was held in the Sanssouci Palace and the Treaty of Potsdam was signed. The Great War ended and an era of German hegemony began.
Meanwhile in America
After the 1907 Crash, president Roosevelt devised the "Roosevelt Plan". The plan envisioned a recovery guided by the government, with heavy interventionism and public works. The opponents of the plan said it was socialist and a threat to capitalism. Roosevelt didn't seek a third term in the 1908 election and trusted William Howard Taft with the mission of implementing the plan, but after narrowly winning the election, Taft betrayed Roosevelt and implemented his own conservative economic policies. The Taft policies were a failure and extremely unpopular. Infuriated by Taft's betrayal, Roosevelt sought the republican nomination in 1912, but narrowly lost to Taft. But Roosevelt didn't accept this. He and his delegates walked out of the convention and formed the Progressive Party. The party was very successful and soon almost all republican voters abandoned the GOP in favor of the Bull Moose Party, however the progressives didn't win the election. The 1912 election ended in an historic tie with Wilson, the democratic candidate winning 256 electoral votes and 20 states, Roosevelt, the progressive winning 232 electoral votes, 21 states and the popular vote, Debs, the socialist winning 39 electoral votes and 6 states and Taft, the republican winning the 4 electoral votes of Utah. The democrats and the progressives struck a deal by which Wilson would become president, and Hiram Johnson, Roosevelt's running mate, would become vice president. The cabinet would be equally divided between the two parties. Wilson and Johnson were sworn in on March 4 and the so-called "Demogressive" administration began. The new administration implemented the Square Deal, which was based in the Roosevelt Plan. The plan was a success and the American recovery began. The credit was given to the progressive members of the administration and the Progressive Party made huge gains in the 1914 midterms, almost wiping off the republicans and gaining a majority in the Senate. In the 1916 election, Roosevelt ran again and narrowly defeated Wilson, becoming the first progressive president. The progressives also won a majority in the House. The Republican Party failed to win any state and merged with the Democratic Party, forming the Democratic-Republican Party. Roosevelt was sworn in on March 4 1917. The Great Crisis ended that year and the American Economic Miracle began.