American History The Great Depression

When World War I was over in 1918, most Americans had jobs. They spent their money on many new products such as phonographs and automobiles. Americans listened to the radio and watched movies. Companies were growing quickly.  People wanted to buy items like refrigerators and washing machines. These could be purchased on installments. ( Paying a small amount each month.)

During  the 1920's, many people invested money in the Stock Market. The Stock Market is how companies raise money to grow larger. It sells shares of stock. A person who buys the share of stock is buying a part of that company. The person holding shares can make profits if the company makes money or loss money if the company does not do well.

Many people borrowed money from loan companies to buy stocks. In the early 20's, the prices of most stocks went up and up. In the late 20's, problems began to show:

• American companies were making more goods than American buyers wanted.

• Employees were laid off.

• As people lost their jobs they were not able to pay their debts. They could not pay back the loan companies.

• Many were forced to sell their homes and farms.

• The people who had stock tried to sell it.

A panic set it. Soon everyone wanted to sell their stock at the same time. On October 29, 1929, the Stock Market hit its lowest time. This was called Black Tuesday.

Additional reasons for the stock market crash included:

• Banks were investing their money in the Stock Market. When people came to the banks to take out their money, the banks had no money to give them. 
   

• Farmers were also having trouble selling their crops. Before World War I, they had been selling their crops overseas. Europeans began to plant crops once the war was over. Many farmers lost money on their farms because of this.

Once people lost their jobs and money, they had less to spend. Businesses could no longer sell their goods, creating an even bigger problem.

Year	Number of  Unemployed (without jobs)
1929	1,500,000
1930	4,400,000
1933	12,800,000