About the Stock Market Crash
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An article writing about the crash of the stock market in 1929. (click image to go to source)

In 1929, the United States witnessed the worst economic failure to that day. This failure surprised the vast majority of American citizens due to the fact that
for a lot of people, the previous decade had been full of prosperity and happiness. The 1920s are known for massive improvements in technology and wealth. Unfortunately, all good things must come to an end and that was what happened on October 29, 1929. The few days leading up to the crash were themselves a bit shaky. On Thursday, October 24, sell orders shook the stock exchange markets in New York. Stock prices dropped 2, 5, and even 10
dollars between trades. During the first three hours of trading, stock values dropped a total of $11 billion. At noon on that day, several prominent bankers met at J.P. Morgan and Co. to stop the problems in the market. Their plan was to buy stocks well above market value in order to put more money back into the market. Their plan worked and stock values rose again, but the damage was done. Public confidence in the stock market was shaken and people were worried. By the end of the day, 11 men well known in Wall Street had committed suicide. Stock prices remained fairly steady on Friday of that week, dropped a little on Saturday, dropped a larger amount on Monday and bombed on Tuesday. Known as Black Tuesday, this day brought forth the worst economic disaster the United States had witnessed so far. As soon as the bell rung for trading to start, people started selling their stocks for anything they could get. Trading volume rose to a record 16,410,30 shares and the average price of stocks fell 12%. One consumer-allegedly a messenger boy- bought a share for only one dollar. By 1932, the index of stock prices went from 210 to just 30, a decrease by roughly 85% and stocks were valued at about 12% of what they had been worth in September of 1929. (Mintz)




So Why Did the Stock Market Crash?
Many people wonder why the stock market crashed and how the prosperity of the 1920s ended so harshly. Even at the end of the decade before the crash, the country was in abnormally high spirits. Employment rates were high and inflation was almost nonexistent. Income and industrial production had also increased. What some people don’t realize though, is that not everybody was in good order during the twenties. Ever since the end of World War One the farming industry had been down. After the war ended, European farming was jump started to recover from the war, and Argentina and Australia had also entered the foreign market. This affected American agriculture which in turn, affected everybody in America. “Rural consumers stopped buying farm implements, tractors, automobiles, furniture, and appliances.” Millions of farmers defaulted on their debts and this put pressure on the banking systems, causing 5,000 banks out of the 30,000 banks in America to fail, all before the crash of 1929 even happened. A disastrous chain of events began after this. The banking predicament caused many small business people to fail because they could not acquire loans. People built up large amounts of debt and would cut back on other necessary spending in order to pay them. Less consumer spending therefore led to reduced production and layoffs. This in turn led to less consumer spending and the entire cycle just repeats itself. While this was all going on, the Federal Reserve did the exact opposite of what it should have done. In an attempt to slow stock market speculation, the Reserve slowed the expansion of money in the economy and then allowed it to fall sharply after the crash happened. Because of this, consumers were even further behind on their debts and business could not finance operations. Still, the Federal Reserve only made the situation worse. Instead of dropping interest and expanding money supply like the government does today, they allowed America’s money supply to fall by 27% between 1929 and 1933. Republican tariff policies didn’t do anything to help the economic situation either. These tariffs, like the Fordney-McCumber Tariff of 1922 and the Hawley-Smoot Tariff of 1930 brought tariff rates to a record high. These tariffs also affected international trade. Other countries imposed their own tariffs to offset the United State’s. This stopped U.S. exports and by 1933 international trade was down by 30%. These several factors left the economy of the United States in a prime position to fail, which it eventually did. (Mintz)


Effects of the Crash/Depression
Over 50 years after the depression happened, people were still affected by it. Breadlines, soup kitchens and “Hoovervilles” still infected the country. The collapse was huge in all ways;
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Two men looking for jobs after the depression hit. (click image to go to source)

unemployment, bank failures, decrease of income and production, and poverty. Unemployment rose from less then 3 million in 1929 to 4 million a year later, then to 8 million in 1932, and it finally reached 12.5 million 1932, a total rise of over 300%. Anybody lucky enough to have a job was not much better off anyways. Those few experienced severe price cuts and less working hours. Only tenth of all companies did not cut their worker’s pay and by 1932, “75% of all American workers were working part-time schedules averaging a total of just 60% of a normal work week.” In a matter of just four years, average family income in the United States dropped 40%, from $2,300 to $1,500. Homelessness was a problem as well. In the Pennsylvanian coal fields, three or four families would live in one-room huts and survive on wild seeds. Families in Arkansas were found living in caves and in Oakland, California, entire families would live sewer pipes. Vagrancy rates rose as families could not pay their rents and many people moved from town to town looking for jobs. The Southern Pacific Railroad claimed that it threw 683,000 vagrants off its trains in 1931. As mentioned before, many families wouldn’t pay medical or dental expenses in order to save money. People also had to cope by “planting gardens, canning food, buying used bread, and using cotton and cardboard for shoe soles.” People stopped buying milk or meat, even in the wake of decreased food costs, and in New York City, milk
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A man trying to sell his car to get some money after the crash. (click image to go to source)

consumption dropped by a million gallons a day. President Hoover was unaware of the realities facing the country, actually stating that "[n]obody is starving. The hoboes are better fed then they have ever been." What he didn't know was that there were 20 known cases of starvation in New York City in 1931, and 110 in 1934. It forced people to put a hold on many aspects of their lives. People would have to forgo divorces, marriages, or having babies. After the crash, the birthrate fell below the replacement level for the first time in American history. And even though the divorce rate dropped, there was a higher rate of desertion. By 1940, there were 1.5 million married women not living with their husbands and over 200,000 vagrant children roamed the country after their families split up. The effects of the crash were not just physical, but also psychological, especially for men. Without jobs and a steady pay, many men lost power, "self-respect, and became immobile and stopped looking for jobs." Others turned to alcohol to solve their problems or became destructive to themselves or their families. While men fell, women rose. Many women actually gained during the Depression. To help supplement the family when their husbands lost their jobs, these women would enter the work force. Even though they were usually working menial occupations and not bringing in very much money, the fact that they were bringing in any money gave them a higher status in the family and gave them a say in family decisions. (Mintz)



Unemployment
Unemployment was probably the most influential part of the Great Depression. In just two years, from 1930 to 1932, the unemployment rate in America went from 3.2. percent to 24.9 percent. Those numbers were of course, just the overall rates. Depending on the specific area, unemployment could be much higher. In the community of Harlem, New York, the rate was 50%, and in the manufacturing regions of the mid west, the rate of unemployed Americans jumped to 75%. In the year 1933 alone, 15 million American citizens had no job. Average household income dropped from $2,300 a year to $1,500 a year. Soup kitchens, breadlines and "Hoovervilles" began dotting the country's suburbs, and suicide rates rose. (Carlisle 2-3) The Ford Motor Company had 128,000 employees in the spring of 1929 had fired 91,000 of
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A graph showing unemployment rates before, during, and after the Great Depression. (click image to go to source.)
by August of 1931. One tenant resident on 113th Street in East Harlem wrote to Congressman Fiorello La Guardia in Washington:

"You know my condition is bad. I used to get pension from the government and they stopped. It is now nearly seven months I am out of work . I hope you will try to do something for me. . . . I have four children who are in need of clothes and food. . . . My daughter who is eight is very ill and not recovering. My rent is due two months and I am afraid of being put out."

Unemployed people eventually started to become angry about their situation and became violent. John Steinbeck described "these people" as "dangerous" and Mauritz Hallgren, in her 1933 book Seeds of Revolt, brought together reports of events happening around the country:
" England, Arkansas, January 3, 1931. The long drought that ruined hundreds of Arkansas farms last summer had a dramatic sequel late today when some 500 farmers, most of them white men and many of them armed, marched of the business section of this town. . . . Shouting that they must have food for themselves and their families, the invaders announced their intention to take it from the stores unless it were provided from some other source without cost.."
"Detroit, July 9, 1931. An incipient riot by 500 unemployed men turned out of the city lodging house for lack of funds was quelled by police reserves in Cadillac Square tonight. . ."
"Indiana Harbor, Indiana, August 5, 1931. Fifteen hundred jobless men stormed the plant of the Fruit Growers Express Conmany here, demanding that they be given jobs to keep from starving. The company's answer was to call the city police, who routed the jobless with menacing clubs."
Halgren also writes about incidents in Boston, Detroit, Chicago, New York, and Seattle, all involving large groups of unemployed people demanding food or jobs. (Zinn 387-88)
When people think about the Great Depression, most of them think of unemployment at some time. Jumping from an average of 3.2% from 1922-29, to almost 25% in 1933 the unemployment rate reached the highest it has ever been in the United States. The high rate of unemployment was the cause of many other problems during the Depression; suicides, riots, deaths, vagrancy and many others.
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