The Great Depression

The Nations Sick Economy

Industries in trouble Key industries were barely making profit (textiles,

steel, railroads) Mining and lumbering (which had expanded to meet

needs during WWI) faced diminished demand for their goods in peacetime

Coal miners faced competition from new types of energy (fuel oil, natural gas, hydroelectric power)

Construction of new houses fell, causing a chain reaction for other businesses that depended on housing industry (furniture makers, building materials, household appliances, labor)

Farmers in trouble

After the war, demand fell and crop prices declined

Many lost their farms, and as farmers began to default on loans, rural banks began to fail

Consumers spend less

As they had less money to spend, consumers bought fewer goods and services

Many Americans were living on credit, acquiring tremendous debt which many had trouble paying off

Uneven distribution of income

Between 1920-1929, the income of the wealthiest 1% of the population rose by 75%, compare with 9% for Americans as a whole

In 1929, the wealthiest 5% of families took nearly 1/3 of the nation’s income while the poorest 40% earned just over 1/10th of the nations income

Dreams of riches in the Stock Market

Some economists were warning of serious weaknesses in the economy, but most Americans remained unaware

Stock market prices rose steadily (“bull market”) and many Americans rushed to buy stocks and bonds

Investors engaged in speculation (bought and sold stocks rapidly, causing prices to rise on paper, but not necessarily in real worth)

Investors began buying on margin (paying a small percentage of the stocks price and borrowing the rest)

Black Tuesday

In early September 1929, stock prices peaked and began to decline

Confidence in the market wavered and some investors sold their stocks and pulled out

October 29 was known as Black Tuesday—the bottom fell out of the market People and corporations sold their stocks, and those

who had bought on credit now had huge debts By mid-November, investors had lost $30 billion ( The

amount equal to what the US spent in WWI)

Great Depression

Period from 1929-1941 in which the economy was in severe decline and millions of people were out of work

Stock market crash signaled beginning, but historians and economists cite a common set of factors An old and decaying industrial base—outmoded equipment

made some industries less competitive Crisis in farm sector Availability of easy credit Unequal distribution of income—too little money in the hands

of working people, who were the vast majority of consumers

Financial Collapse

Americans panicked and withdrew their money from banks, causing banks to close Roughly 9million people lost their savings

Millions of workers lost their jobs Unemployment leapt from 3% in 1929 to 25% by 1933

(1 out of every 4 workers did not have a job)

Hardship and Suffering During the Depression

Depression in the cities Many could not pay rent or

mortgage—lived in the streets

Slept in parks or sewer pipes, wrapped in newspapers to fend off the cold

Shantytowns—little towns consisting largely of shacks sprang up on the outskirts of cities

Soup kitchens and bread lines opened up in many cities to feed the homeless

Depression in Rural Areas

Rural life had one advantage over city life—most farmers could grow enough food to feed their families

Dust Bowl Farmers from Texas to North Dakota had used tractors

to break up the grasslands, they eventually exhausted the lands

When the drought and winds began in the early 1930’s, little grass and few trees were left to hold the soil down

Plagued by dust storms, and evictions, many packed up their families and moved to California

Men and their families

Men swarmed the streets looking for jobs After years of not

finding any work, some simply stopped looking or abandoned their families

Approximately 2 million men wandered the country, hitching rides on box car of railroads and sleeping under bridges

Women and Children Struggle

Women worked, but received less money than men

Women became targets for resentment as some people believed that they had no right to work when men were unemployed

Children suffered malnutrition and diet related diseases

Falling tax revenues cause schools to close, many children went to work in sweatshops under horrendous conditions instead

Social and Psychological Effects

Between 1928-1932, the suicide rate rose nearly 30%Three times as many people were admitted to state mental

hospitals as in normal timesAdults stopped going to the doctor and dentist and young

people had to give up their dreams of college, getting married and having families

For some, achieving financial security became the primary focus in life

Many people did, however show great kindness to strangers down on their luck Strengthened bonds within communities

Many people developed habits of saving and thriftiness that would stay with them a lifetime Many of these habits shaped a whole generation of Americans