The Great Depression
The Great Depression is one of the worst economic events that occurred in America between 1929 and 1932. This period was preceded by economic and credit booms with many individuals and companies investing in the stock market. After the 1929 Crash of the Stock Market, things took a different turn and America’s economy spiraled down to its knees. The following are some of the major impacts that this devastating economic crunch had on America and its citizenry.
Banks went Bankrupt
Most of the banks were lending money to individual investors and companies during the 1920s. In fact, there was a credit boom during this period and most people had borrowed money to invest in stock markets and other areas. Subsequently when the crash of the stock market occurred, the banks were most affected. The early thirties saw about 10000 American banks close down including The Bank of America.
Companies Closed Down
Most companies relied on the banks for credit during the 1920s. This credit was invested in new projects, inventions and other strategic activities. In addition, companies also heavily depended upon consumption of their products. During the Great Depression most banks collapsed and credit was very limited. Most citizens could no longer afford their basic needs. Even though there were shops which were stocked, people could not purchase basic utilities such as food. As a result prices of commodities went down and companies suffered huge losses. This led to their subsequent closure.
High Unemployment Rate
There was massive unemployment in America following the Great depression. It is estimated that 12,000 people lost their jobs on a daily basis and almost 60% of Americans were jobless during this period. This was because many companies closed shop leaving the masses unemployed.
In particular the traditional industries such as the Steel industry, Real Estate industry and many other factories could no longer remain open because of the major losses they kept incurring. These businesses shut down as a result leaving millions of Americans unemployed.
Furthermore, those who worked in farms were also adversely affected by the Great Depression. This is because many small scale farmers lost their land as a result of bankruptcy and auctions. The few that remained could not produce anything anymore because they used poor methods of farming and over-tilled the land until it was no longer productive.
High Immigration Rate
During the 1920s many immigrants had come to America in such of opportunities. This changed during the Great Depression. It is estimated that the number of such immigrants dropped from almost 250,000 annually to 23,000 only. Instead, Americans began migrating to other countries. Rural to urban migration was also high during this period as people left their unproductive farms to seek alternative means of earning a living.
High Levels of Poverty
Generally, the Great Depression was marked by unprecedented levels of poverty in America. Over 60% of children were malnourished and hundreds of thousands of people were reported to have suffered from starvation. There were also 2 million people who were left homeless as a result of foreclosures of both personal homes and farms. Such people moved to shanties made out of carton boxes which were nicknamed “Hoovervilles” in scorn of the then sitting President Hoover.
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