The early 1920s was a time of great optimism, with new cures to diseases being discovered, peoples’ life expectancies lengthening, and the economy booming. The soaring stock prices and low unemployment were putting the owners of companies in a state of bliss. Companies even practiced welfare capitalism, were they chose to provide all the necessities to keep their workers happy, serving to weaken the powers and influences of unions. With optimism and excitement clouding their mind, people failed to see the potential downfalls of their actions. Though many were prospering, the money was not spread evenly among the public. The popular choice of buying on credit was leaving people with growing debts. Speculation worked out for some but by challenging the high risks, many lost a lot. To add to the debt, investors often bought on a margin, and when the companies they backed toppled, the companies dragged the investors down with them. Lastly was the issue of overproduction, where companies had a higher supply than demand, meaning that workers had to be laid off.
All the blunders of America’s people only served to worsen the aftershock that came when the stock market finally crashed. At first, there was a slight sink in the stock prices, but once people began to panic-sell their shares, the market plummeted downwards. Even with businesses and political leaders assuring the nations that there was no problem, the panic spread. The banks’ attempts to stabilize the stocks prices worked momentarily, but that peace did not hold for long. Three million dollars were lost overnight, and the total losses hit around thirty billion. The crash mainly affected the wealthy because when the banks called in their loans, the rich ones whose foundations were built on borrowed money lost everything to pay it back. This crash was a regular part of the business cycle, but obsessed with the promises of great wealth, most failed to pay it any heed.
Stockholders were affected first, but soon millions of Americans had lost their jobs, farms, and homes. As income and profits fell, factories closed. This lead to workers losing their jobs which in turn led to less spending. Less spending decreased income and profits further, causing the cycle to repeat endlessly. Lower production lowered the Gross National Product. That along with diminishing investments in foreign countries affected parts of the world thousands of miles from the U.S. People couldn’t pay back their loans, meaning that banks couldn’t pay back what they owed to the government. Thousands of banks closed in the coming years and the peoples’ money vanished. The effects of the crash lasted all the way until World War II.
People who either couldn’t keep up with their mortgages or rents either left on their own or came home to find their belongings on the curb. In 1931, there was an estimated 15,000 homeless living in New York City alone. All over the country, makeshift towns were built by the homeless as temporary refuges. These towns were nicknamed “Hoovervilles”, as the President was often blamed for their current situation. The falling prices were not limited only to goods, but food as well. Falling farm prices left many farmers without homes. The banks who took the farms auctioned them off. In rebellion, some farmers teamed up to pour out thousands of gallons of milk and destroy crops, shocking an already hungry nation. Many of the newly impoverished people just didn’t understand where their money had gone to when the banks closed. There was a great deal of confusion mixed in with the general panic.
Unemployment and the fear of losing their jobs caused the public great anxiety. Many became depressed and some even suicidal. Some people starved while many more went hungry. The malnutrition took its biggest toll on the children. In the countryside, people grew food and ate wild plants and berries. In cities, people sold apples and pencils, begged for food, and fought over the scraps thrown out by restaurants. Families with land planted “relief gardens” to feed themselves and barter for necessities. The divorce rate also dropped, which is to be expected when it would cost so much to acquire separate housing. Many men felt like failures because they couldn’t support their families and many women were accused of taking the men’s’ jobs. Due to heightened discrimination, blacks found it even harder to get or hold jobs. Unemployment for people of African descent eventually peaked at 56%.
Even with everything they’d been through, Americans still found ways to live on. Groups formed to protest rent increases and evictions. Some farming communities even agreed to keep bids low, eventually returning the farms to their original owners. Though the economy was in a horrible state, there was no call for widespread political change. People trusted their government to handle the problems and restore the country to a healthy state. With people on the look-out for methods of securing a stable future, many became members of parties not previously popular. These included the Communist and Socialist Parties. Through all the depression, the era was still remembered as a time of appreciable cooperation. Humor, generally in the form of cartoons, was a way for people to laugh their way into a more cheerful mindset.
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.” Though a quote referring to the times leading up to the French Revolution, it fits exceedingly well with the events that transpired during the 1920s and the decade following it. Everything was going well, and then the worst happened, but people always have ways of making the best out of bad situations. The stock market crash put America in a depression but by cooperating and using what was available, the people were able to keep the country from falling apart completely; at least until World War II came around to revive the economy.
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