Bailey Hall 1 17 14 2nd period Great Depression The Great Depression was an immense tragedy that placed millions of Americans out of work and living on the streets This economic downturn resulted because of 3 main things Black Tuesday financial collapse and Reduction of purchases The stock market crash signaled the beginning of the Great Depression Even though the crash did not directly cause the Depression it did impact the collapse of the economy and make the depression more severe The Stock market had become the most visible symbol of a prosperous American economy People would look at the Dow Jones Industry Average to interpret the Stock Market s health By 1929 about 4 million Americans owned stocks Many of these investors were already wealthy but others were average Americans who hoped to strike it rich The dreams of hoping to strike it rich resulted in speculation and people buying on margin Buying on margin was dangerous because the investors only paid a small amount as a down payment and borrowed the rest If the value of the stocks declined people who had bought on margin didn t have any money to pay of the loan they had taken so they ended up having a large debt In early September 1929 stocks peaked then fell This caused Americans to question their confidence in the stock market and some investors even sold their stock and pulled out On October 24 the market took a plunge then finally the bottom fell out of the stock market on October 29 1929 also known as Black Tuesday People who had bought stocks on credit or on margin were in major debt while others lost most of their life saving After the crash many people panicked and withdrew their money from the banks but some couldn t access their money because the bank had spent it buying stock After people rapidly withdrew their money and the Bank s stocks failed most of the banks plummeted into financial crisis By 1933 11 000 of the 25 000 banks in America had failed because the government did not protect or insure Millions of people lost the majority of their savings this just worsened the financial collapse As the economy plunged into a tailspin and millions of workers lost their jobs The job loss was bad that unemployment leaped from 3 in 1929 to 25 in 1933 1 out of every 4 Americans were out of work and those who kept their jobs faced pay cuts and reduced hours With the stock market crash and of further economic crises individual stopped purchasing items of all sorts This then led to a reduction in the number of items produced and in a reduction in workforce because if items weren t being produced then nobody had to work As people lost their jobs they were unable to keep up with paying for items they had bought through instalment plans and their items were repossessed More and more inventory began to accumulate as the unemployment rate rose less spending happened and nothing was helping to alleviate the economic situation So because no one had money they didn t ever buy anything accept the essentials and sometimes these families couldn t afford the essentials Since families couldn t buy anything the stores product demand fell When store product demand falls so does the need for labor and when the need for labor falls people get laid off or fired these families get even less money The Great Depression was a very tough time in America s history It was a circle of poverty that was unbreakable until FDR became president and proposed the New Deal and also WWII helped us come out of the Great Depression but that s a whole different essay Truly the Great Depression showed the fragility of the Stock market how American s confidence in the stock market was too high and how those both impacted spending and how spending impacted the workforce