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During the 1920's in America, most people lived in cities rather than in farms. Big factories are pushing out more goods to the masses. People are prospering and getting very rich. People are spending and making money at a fast rate.
The Great Depression was foreshadowed by the overproduction of goods by factories and businesses, overproduction of agriculture, and the uneven distribution of wealth. Americans were also buying less products. If Americans were buying less goods, then factories did not need as many workers. This led to factories laying off workers.
In September of 1929, investors began to notice that the price for stocks were very high, so they started to sell their stocks, hoping that prices would decline. But, stocks continued to decline and no one wanted to buy stocks. Prices continued to decline until on Thursday, October 24 the stock market crashed. This day would be known as Black Thursday.
Due to people buying stocks on margin, they could no longer afford to pay the money they owed back. The stocks that they had purchased were now worth nothing. Unemployment rates began to rise as well as industrial production, and wages declined. By 1932, factories produced half of what they had been. Businesses and banks failed. People lost all of their money when the banks could no longer pay them and farmers lost their land.
The stock market crash affected people around the world. American bankers wanted their loans repaid and investors withdrew their money from Europe. Due to the market for European goods dropping, the U.S. Congress placed high tariffs on imported goods, so that American dollars would stay in the U.S. and pay for American goods. By 1933, 1/4 of all American workers did not have a job.
After F.D.R. was elected into power, he began a system of government reform called the New Deal. He began to implement large public works to help provide jobs for the people that were unemployed. Government agencies gave financial help to businesses and farms. Public money was spent on welfare and relief programs and new regulations were imposed to reform the stock market and the banking system.
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