What was the Impact of the Wall Street Crash?
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The Wall Street Crash and its impact
- The 'Roaring Twenties' came to a sudden end.
- The unstable economy during the 1920s and the Wall Street Crash in 1929 led to an unprecedented depression in the USA.
- American people lost faith in Republican policies and voted in Franklin Roosevelt (Democrat) in the 1932 election.
- The crash brought financial ruin for many businessmen and financiers.
- America’s GNP dropped by almost 50 per cent. Car production fell by 80 per cent and building construction by 92 per cent.
- Firms went bankrupt. Between 1929 and 1932 109,371 businesses failed. Some businessmen committed suicide.
- Banks collapsed.
- 659 banks closed in 1929. This increased to 2,294 in 1931. They collapsed because people withdrew their savings for fear of losing money. Their closures, in turn, led to the remainder of savers losing their cash as well.
- Those banks which remained refused loans to struggling firms, leading to bankruptcies.
- People who bought “on the margin” were also in debt.
- The public lost confidence in the economy and hope in the future. They blamed big businesses and banks for the problems. Suicides went up 50 per cent.
- People could no longer buy consumer goods, such as cars and clothes. As a result, workers were made redundant.
- Unemployment rose to 25 per cent of the national workforce (14 million people).
- In some regions it was much higher.
- In Denora in Pennsylvania in March 1932, only 277 people out of nearly 14,000 had jobs. There was no work at all in the coal mines of Illinois.
- Unemployment and distress were highest among immigrants and black Americans.
- Overall, there was great misery.
- People struggled to buy basic goods, such as food and clothing.
- The number of deaths directly linked to starvation increased during the Depression, and many other illnesses and deaths were related to a lack of nutrition.
- Homelessness was common as repossessions of homes increased.
- About 2 million bankrupt farmers and unemployed people became hobos.
- Shanty towns, called Hoovervilles, made out of waste materials like cardboard, sprang up at the edges of most towns to house displaced people.
- Some people slept on park benches. Others deliberately got themselves arrested as it meant food and a bed for the night.
- Even those with jobs faced difficulties. Women, immigrants and black Americans had no choice but to work for longer hours for reduced pay.
- Wages dropped to starvation level. The average hourly wage in factories fell from 59 cents in 1926 to 44 cents in 1933.
- The plight of farmers, which was already distressing in the 1920s, deepened.
- A renewal of the USA’s tariff war with other countries, because of the Hawley-Smoot Act, decreased their sales even further and evictions for non-payment of mortgage increased.
- Prices were so low, farmers left the crops to rot in the fields and farm animals were killed instead of being taken to market.
- Natural disasters compounded the problems.
- From 1930 onwards, farmers in the Mid-West were hit by a series of droughts, which eventually created the Dust Bowl of 20 million hectares of land.
- Farmers in the Tennessee Valley had their crops and topsoil washed away by floods.
