How Did The Great Depression Affect The Economy In The 1930's

The 1920’s was a flourishing decade; the economy was rapidly growing and changing, World War I was over and Jazz was emerging as the new fad of music. Sadly, the United States could not stay prosperous due to lack of understanding of simple economics during that time. After the war, the use of credit really hit it off in America, this allowed Americans to ‘buy now and pay later’. This meant that many Americans were saving less and spending more simply because they could. With introduction of stock markets many people were able to invest their money and profit off of it later on. Investing money in order to make money worked for a while until people began to speculate. Many people began to get greedy and speculate on many stocks at once, this …show more content…
After the stock market crash, many people went into a panic and tried to sell their stocks to any willing buyer. In the book titled, The Crash of ‘29 and The new Deal, Bruce Glassman wrote on page 28 that “On Tuesday, October 29 more than 16 million shares of stocks changed hands, and many stocks closed at half the value they showed that morning”. The value of stocks had dropped to a devastating level so when the stockowners tried to sell their stocks they made little to no money off of it. That put many Americans in the red because they were not able to pay off the loans they took from the bank. In turn, that meant, combined with their already building debt, the banks did not have enough money coming in. The Stock Market Crash of 1929 was a leading cause and the beginning of The Great Depression but the tipping point of it was because there was a money shortage throughout the banks in America. “By the spring of 1930, six months after the crash, more than 4 million Americans were out of work” (Glassman 29). Businesses who lost money in the crash had to lay off workers and stores were not making any money because no one had money to buy goods. The Great Depression was the worst economic downturn in American history, and with President Herbert Hoover, who was unwilling to step in and help the growing poor population, it was a never ending cycle that could not be broken. As a result of job loss, American families could not pay their bills which caused the men to leave the homes and move into Hoovervilles because they could not support their families. In light of the sudden poverty amongst families, many Americans could no longer carelessly spend their money on goods they did not need. A lot of people had to learn how to budget their money and learn the value of a dollar so they could spend money on necessities