Unemployment during the Great Depression
How it works
The stock market crash all started on black tuesday on october 24, 1929. During Black Tuesday 16,410,030 shares on the New York stock were traded in a single day. Billions of dollars were lost, wiping out thousands of investors. Tons of machines controlling the trades were shut down due to the tremendous amounts of share trades. Due to Black Tuesday, America as well as the industrial world to spiral down into what is known as the Great Depression. After this the cycle of which consumers were buying goods on installment at a faster rate than their income was expanding as well as widespread unemployment are reasons why the great depression was led on for 10 years.
During the Great Depression people were buying goods faster than companies or factories could produce them. Document 1 shows how this was used; people no longer cared about their debt so they were buying products off of installment plans, which is borrowed money. This put a giant hole in the economy when the amount of purchases where reduced and it forced all the banks and factories to shut down due to them losing all their money. This is also shown in document 4 because people would put their stocks they bought with loans up for collateral to pay those loans back, and more often than not they failed to pay in time and their stocks would be sold and they would be in a even deeper hole than before.
Another reason is because the Great Depression caused widespread unemployment. Document 2 shows how many families were unemployed by showing the family’s income. More than 21% of families in 1929 made under $1,000. This isn’t even enough to buy the minimum necessaries for meeting the basic needs for an average family. This is also shown in document 3 because the farmers had a observed amount of over-production, which caused a massive decrease in the prices of crops. This cause many farmers to fail economically.
After WW1 the united states became a debtors nation. This is shown in document 5. Not only did the united states owed nearly 3 billions of dollars to foreign investors, but the US had loaned of 10 billion dollars to foreign countries.
The cycle of which consumers were buying goods on installments at a faster rate than their income, so this caused them go into massive debt when the amount of purchases reduced. This in returned caused widespread unemployment. Theses are all some reasons why the Great Depression was led on for 10 long years.