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From ABC-CLIO's American History website https://americanhistory2.abc-clio.com/

The Crash and Great Depression, 1929-1939

Throughout the 1920s, the stock market rose to unprecedented heights. Giddy with prosperity, investors believed it would continue rising forever. Even the revelation of widespread fraud—from Florida swampland to California oil—did not diminish their enthusiasm.

Few voices counseled caution. Before World War I, the ideal citizen saved for a rainy day and was careful not to go into debt. During the 1920s, the ideal American was a spender and investor. The thrifty, �nancially cautious person was considered old fashioned, out of step with the times. Two types of stock markets existed: the bull market and the bear market. In the bull market, prices went up and it was considered a great time to buy. In the bear market, things were relatively slower and money was made through the short sale of stocks. The 1920s was considered a full-blown bull market and many people bought stocks, seeking to make a fortune.

Reckless Spending

Major changes in spending habits in the postwar period occurred, marking a shift from conservative spending practices, with many individuals reluctant to buy or go into debt, to people engaging in reckless forms of spending, speculation, and debt accumulation. Consumers sought to "keep up with the Joneses" throwing caution to the wind and thus eroding any sense of thrift or a need for savings. Methods of buying changed during this time, with many people buying items on credit or layaway.

These changes in spending habits had an e�ect on the stock market as speculators engaged in investing on a larger scale. Many investors developed large �nancial portfolios. The practice of "buying on the margin," meaning buying stocks without money to back them, became widespread. The margin call, where a person would buy more stocks to pay o� their investor, also became a common practice. As stocks rose, people became overly optimistic about the markets, despite the widespread corruption.

Like a roller coaster reaching its highest point, the stock market fell sharply, rose, and fell again during 1928 and 1929. In March, 1928, the New York Times industrial average climbed 25 points. The bull market continued into June, then fell on June 12. But the market recovered, with the industrial index reaching 86.5 points by the end of the year. At the end of March 1929, the market dropped again. Recovery came quickly, with the industrial index rising 77 points in June and July. The market fell in August, then started back up again, fell by 10 points on September 5, and regained the losses in the following days.

The Crash

On October 21, 1929, a Monday, the end began. Stock prices began to slide, and people tried to unload their holdings. By Thursday, October 24, there were more losses in a frenzy of trading. Bankers tried to stop the disaster by pumping in cash and buying lots of stocks. The market hesitated, but con�dence did not return. Monday, October 28 saw more selling. Then came "Black Tuesday," October 29. The crash was undeniable. The industrial index lost 43 points in a single day. That wiped out all the gains of the year. Investors lost more than $10 billion in a single day. (The amount is equivalent to nearly $100 billion today.)

Most people did not own stocks, but the e�ects of the crash were not limited to stockholders. Across the country, factories closed and banks failed. Men and women lost their jobs or saw their salaries slashed. Soon, homelessness and hunger stalked the land. A social worker who was a child at the time remembers how the

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crash came to his family: "I knew the depression had really hit when the electric lights went out. My parents could no longer pay the $1 electric bill. The kerosene lamps went up in the home. And in the business."

The psychological consequences of the Great Crash of 1929 were quite dire. People became terri�ed of spending as their savings eroded. Production was halted in various industries as consumer spending ground to a halt and people only bought necessities. Consumers were reluctant to deposit money in banks, leading to a series of bank runs that depleted their funds and led to their eventual insolvency.

Great Depression

While the stock market crash had a severe e�ect on the national economy, other factors also contributed to the coming of the Great Depression. In the 1920s, the agricultural sector was struggling, with a vast depression occurring in the countryside as small farmers lost their lands to banks and large corporations. The production of textiles, clothing, lumber, and other industries had been slowing. Railroad stocks had decreased in worth given the emergence of the automobile. In terms of wealth distribution, a small percentage of Americans held most of the national wealth. The lack of regulation of the stock market and unethical practices like insider trading went unregulated, leading to the practices that led to the Great Crash of 1929. All these factors working in tandem led to the Great Depression of the 1930s.

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Farmers and the Dust Bowl As tractors and machinery came to farms, the need for labor dropped. Agriculture turned to agribusiness. Investors bought two or more farms and combined them into a single unit. Consolidation of farms pushed indebted families o� the land. Throughout the early decades of the 20th century, displaced farm families migrated to urban areas to look for work.

After the Great War

During World War I, U.S. farms had produced food for Europe and the United States. Farmers felt pride in their ability to feed a hungry world. Prices for their crops were high enough to pay the cost of production—and show some pro�t as well. After the war, European farms returned to production. Now there was an oversupply of grain, and prices plummeted.

Some farmers, believing that prices must rise again, took out loans to continue operating. When they could not pay the loans, they lost their farms as their lands were repossessed by banks. As farmers su�ered during the 1920s, so did rural communities. In 1928, as the rest of the country basked in prosperity, hundreds of rural banks failed. Agricultural business changed drastically during the 1920s and the 1930s as major corporations took over lands lost by smaller farmers. These agribusiness concerns consolidated small farms into large e�cient systems of production able to invest more in equipment, marketing, and sales of produce.

Farmers Look to Federal Support

As the agricultural sector based on the small family farm was falling apart, traditional attitudes towards the role of government assistance changed dramatically. American society did not view the government as a source of assistance amid crisis, particularly during times of �nancial hardship. However, this new situation drastically altered the expectations of farmers regarding their relationship to the government. In the 1920s, in an e�ort to address the worsening economic situation, the federal farm bloc was formed to help reform agriculture and get national and state legislation passed to help small farmers.

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In 1922, the Capper-Volstead Act was passed, which exempted agricultural marketing cooperatives from antitrust protection. This allowed joint ventures by small farmers to be legally protected. President Herbert Hoover created the Federal Farm Board in 1929. This board aimed at stabilizing prices by storing surplus grain and cotton and promoting the sales of agricultural products. By the time the Great Depression hit, farmers needed direct �nancial government assistance to maintain their livelihood.

Into the Depression

The already depressed farm economy got even worse after the 1929 stock market crash. Gross income from farming fell from $13.9 million in 1929 to $6.4 million in 1932. By 1934, banks or government agencies owned about 30% of the farmland in the West and Midwest.

Farmers could not pay mortgages and were forced o� their land. Recently displaced and with few employment opportunities, they wandered aimlessly, some �nding comfort in other homeless communities.. Some camped in Hoovervilles, the tent and cardboard camps of homeless people that sprang up at the edges of cities.

The Dust Bowl

During the early 1930s, drought settled over the Dakotas, Montana, Oklahoma, and parts of Kansas, Colorado, and Texas. For generations, farmers had broken up the sod and plowed and planted the prairies. Now the dry earth and wind combined to create black blizzards. Clouds of blowing dust darkened the skies at midday and piled up in drifts alongside the roads. As winds rocked farm homes, dust blew through and covered everything and everyone in �ne, gritty layers. No crops grew, and no harvest meant no money and no farm.

By 1934, caravans of newly landless farm families headed west. As many as 2 million people left the a�icted regions of the Great Plains and South. They hoped to �nd work picking fruit in California. Derisively called "Okies," they found scant welcome in the Golden State. Agricultural labor was plentiful, but work was scarce as displaced Dust Bowl families competed with sharecroppers evicted from southern farms and California residents. Many of these migrants were able to �nd work in the San Joaquin Valley as agricultural laborers. The Dust Bowl migrant experience was depicted in John Steinbeck's The Grapes of Wrath (1939), which illustrated the social and economic conditions su�ered by these displaced populations. Other cultural representations include popular singer Woody Gurthrie's songs about the plight of the migrants and Dorothea Lange's poignant photographs that captured the experiences of these displaced peoples.

The hardships endured by the Dust Bowl migrants into California led many critics to challenge views of capitalism and landownership in the United States. As such, it contributed to the expansive role of government in assisting those who were su�ering amid the conditions created by the Dust Bowl and the loss of their lands. This would set the stage for later development in the expansion of government assistance in other sectors of the economy as the Great Depression worsened.

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Stock Market Crash Throughout the 1920s, the stock market rose to unprecedented heights. Giddy with prosperity, investors believed it would continue rising forever. Even the revelation of widespread fraud—from Florida swampland to California oil—did not diminish their enthusiasm.

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Few voices counseled caution. Before World War I, the ideal citizen saved for a rainy day and was careful not to go into debt. During the 1920s, the ideal American was a spender and investor. The thrifty, �nancially cautious person was considered old fashioned, out of step with the times. Two types of stock markets existed: the bull market and the bear market. In the bull market, prices went up and it was considered a great time to buy. In the bear market, things were relatively slower and money was made through the short sale of stocks. The 1920s was considered a full-blown bull market and many people bought stocks, seeking to make a fortune.

Reckless Spending

Major changes in spending habits in the postwar period occurred, marking a shift from conservative spending practices, with many individuals reluctant to buy or go into debt, to people engaging in reckless forms of spending, speculation, and debt accumulation. Consumers sought to "keep up with the Joneses" throwing caution to the wind and thus eroding any sense of thrift or a need for savings. Methods of buying changed during this time, with many people buying items on credit or layaway.

These changes in spending habits had an e�ect on the stock market as speculators engaged in investing on a larger scale. Many investors developed large �nancial portfolios. The practice of "buying on the margin," meaning buying stocks without money to back them, became widespread. The margin call, where a person would buy more stocks to pay o� their investor, also became a common practice. As stocks rose, people became overly optimistic about the markets, despite the widespread corruption.

Like a roller coaster reaching its highest point, the stock market fell sharply, rose, and fell again during 1928 and 1929. In March, 1928, the New York Times industrial average climbed 25 points. The bull market continued into June, then fell on June 12. But the market recovered, with the industrial index reaching 86.5 points by the end of the year. At the end of March 1929, the market dropped again. Recovery came quickly, with the industrial index rising 77 points in June and July. The market fell in August, then started back up again, fell by 10 points on September 5, and regained the losses in the following days.

The Crash

On October 21, 1929, a Monday, the end began. Stock prices began to slide, and people tried to unload their holdings. By Thursday, October 24, there were more losses in a frenzy of trading. Bankers tried to stop the disaster by pumping in cash and buying lots of stocks. The market hesitated, but con�dence did not return. Monday, October 28 saw more selling. Then came "Black Tuesday," October 29. The crash was undeniable. The industrial index lost 43 points in a single day. That wiped out all the gains of the year. Investors lost more than $10 billion in a single day. (The amount is equivalent to nearly $100 billion today.)

Most people did not own stocks, but the e�ects of the crash were not limited to stockholders. Across the country, factories closed and banks failed. Men and women lost their jobs or saw their salaries slashed. Soon, homelessness and hunger stalked the land. A social worker who was a child at the time remembers how the crash came to his family: "I knew the depression had really hit when the electric lights went out. My parents could no longer pay the $1 electric bill. The kerosene lamps went up in the home. And in the business."

The psychological consequences of the Great Crash of 1929 were quite dire. People became terri�ed of spending as their savings eroded. Production was halted in various industries as consumer spending ground to a halt and people only bought necessities. Consumers were reluctant to deposit money in banks, leading to a series of bank runs that depleted their funds and led to their eventual insolvency.

Great Depression

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While the stock market crash had a severe e�ect on the national economy, other factors also contributed to the coming of the Great Depression. In the 1920s, the agricultural sector was struggling, with a vast depression occurring in the countryside as small farmers lost their lands to banks and large corporations. The production of textiles, clothing, lumber, and other industries had been slowing. Railroad stocks had decreased in worth given the emergence of the automobile. In terms of wealth distribution, a small percentage of Americans held most of the national wealth. The lack of regulation of the stock market and unethical practices like insider trading went unregulated, leading to the practices that led to the Great Crash of 1929. All these factors working in tandem led to the Great Depression of the 1930s.

ABC-CLIO

Su�ering America All across the country, the Great Depression hit hard. As banks folded, so did businesses. People unable to pay mortgages landed in the street. Soup lines sprang up wherever charity was to be had.

Crisis of Capitalism

In the 1920s, reckless speculation and spending on credit, the lack of regulation over stock purchases, and unethical banking practices, all contributed to the stock market crash of 1929. In the aftermath, an unprecedented economic collapse followed. Large companies let go of thousands of employees. Warehouses were stocked full of products that no one was able to purchase. As thousands found their savings and careers gone, they drifted onto the streets looking for work and, eventually, food. Meanwhile, people adapted the way they traded goods and services, bringing back barter in certain instances.

Amid the chaos, political demagogues emerged with radical ideas to solve the economic crisis. Louisiana governor Huey Long established the "share our wealth" (SOS) program in his state, drastically taxing the wealthy and redistributing wealth through public construction programs to provide employment. Francis Townsend, a physician by profession, suggested that the government provide a monthly stipend for senior citizens to assist with their living costs as well as ensure a boost to the economy through their spending. Father Charles Coughlin blamed Jews and the rich for causing the crisis and used the radio to spread his message.

In the midst of the economic collapse, labor assumed a greater degree of control in relation to the businesses that remained. Many cities and municipalities shut down due to workers' marches. Sit-down strikes, where workers occupied plants to keep strikebreakers out, were common. Wildcat strikes, which were massive impromptu strikes, were also used by labor to incite change. National unions rallied to keep strikes under control as labor unrest became commonplace. During this period,

there was a 25% national unemployment rate, a staggering statistic that illustrated the impact of the Great Depression.

Hoovervilles and Hobos

Many of the destitute built makeshift shacks out of whatever material they could scrounge. The homeless in New York, Chicago, and Denver clustered together in colonies of shacks in these spontaneous shantytowns. They named their new communities "Hoovervilles" after the president they blamed for their plight. Other items were named after President Herbert Hoover, such as Hoover blankets (newspapers). Sometimes police were ordered to tear down the shacks, evict the families, and burn the colonies. Each time, the people came back. Many of these Hoovervilles were located near rivers and soup kitchens.

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The Bonus Army, World War I military veterans and their families, came by the tens of thousands to Washington, D.C. In 1932, 43,000 Bonus Army marchers arrived in the city to demand their military bonus and set up camp. They established a Hooverville of 15,000 residents on Anacostia Flats. They were driven out by the U.S. Army and some marchers were shot in the skirmish, resulting in two deaths. The marchers and their families were driven out and their shacks burned down.

Homeless men and women found shelter wherever they could. They tried to stay in the relative warmth and comfort of railroad stations. Some stowed away in boxcars, hoping that their luck would change in a di�erent part of the country. Some slept in cars or under bridges. Many of these hobos strayed across the country looking for work and created their own unique culture characterized by living on the road.

Desperate Times, Desperate Measures

Prior to the Great Depression, the national work ethic was based on the concept of self reliance and the belief that people should pull themselves up by the bootstraps. People hated being out of work. They wanted the dignity of earning a living. In 1930, unemployed people seized on a surplus of apples as a way to earn money. They bought crates that contained 72 apples for $1.75. Then they sold the apples on the street for a nickel each. If all the apples were good, and if all sold in a day, then a person could make $3.60. That left a pro�t of $1.85, though they might have to pay some of the money for bus fare. Even that was too good to last; the apple- sellers soon raised the price of a crate to $2.25.

The national statistics on unemployment during the Great Depression were glaring considering the total population. One out of four men was out of work and those who continued to work did so for lower pay. They had to deal with the personal humiliation of standing in soup lines and looking far and wide for employment. Some individuals took their own lives or abandoned their families. For women, the position of being a homemaker became far more di�cult given the dire need to make ends meet. Many of these women canned their own food, made do with less, and repurposed clothing as much as possible to keep costs low. Thrift became paramount in the American household.

People had to make various adjustments to their lives given the circumstances unleashed by the Depression. Families stayed together longer with adult children living at home to keep living costs down. Students stayed in school longer with many more attending college. Neighbors and families looked out for each other, creating closer community ties. Given their relative inexpensive cost, going to the movies and radio became popular activities as a way to escape the daily drudgery of life in the Depression.

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Image Credits

Stock market crash of 1929: Library of Congress

APA Citation Stock Market Crash. (2024). American History. Retrieved July 6, 2024, from https://americanhistory2.abc- clio.com/Topics/Display/1187201?cid=41&sid=1187201 Farmers and the Dust Bowl. (2024). American History. Retrieved July 6, 2024, from https://americanhistory2.abc-clio.com/Topics/Display/1187201?cid=41&sid=1187201#1187195

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Stock Market Crash. (2024). American History. Retrieved July 6, 2024, from https://americanhistory2.abc- clio.com/Topics/Display/1187201?cid=41&sid=1187201#1187201 Su�ering America. (2024). American History. Retrieved July 6, 2024, from https://americanhistory2.abc- clio.com/Topics/Display/1187201?cid=41&sid=1187201#1187189   Entry ID: 1187201

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