Impact of The Great Depression

Impacts of the Great Depression Collapse of businesses: Individuals and businesses lost billions e.g Union Cigar's stock went from $113.50 to $4 in a day. He killed himselfPeople could no longer afford to consume or invest any further. Most of the products that fuelled the property were consumer durable e.g cars, there wasn't a need to replace them. --> Industries that supplied them saw demand fall. --> massive level of company cutbacks. --> bankruptcy --> laying off workers --? less money in economy. Collapse of credit: Loans were called in and new ones refused. -->banks were less likely to give out loans = credit squeezeLoss of confidence: People felt betrayed, shocked and no longer believed the white house and big businesses as their credibility was undermined. They were despised as they were seen as having let the nation down. Economic effectsUneven distribution of unemployment - African-Americans: Number of African Americans out of work was 4-6 times higher than the whites. -Women: Were likely to be laid off before men. In 1930 over 75% of American school authorities refused to employ married womenEffects on individual industriesGrowth rate went into decline from 6.7% in 1929 to -14.7% in 1932, representing a fall in GNP from $203.6 billion in 19229 to $144.2 billion in 1932. generic price levels fell by 25% and farm prices by 50%. In the coal industry production in 1932 was the lowest since 1904 and the workforce fell by 300K --> those in work were part time --> wages were as low as $2.50 per day75% of textile firms were making a loss and iron and steel production fell by 59%, car sales fell from 4,455,178 in 1929 to 1,103,557 by 1932The construction industry saw the number of residential units fall by 82% between 1929 and 32Problems with credit and bankingBank closures multiplied, the ones that were open lacked liquidity and end up in financial trouble. --> depositors lacked confidence in their bank. People often wanted to withdraw their money for various reason e.g meeting a debt. if many people withdrew=bank closing. People could not afford to pay back their loans so banks didn't have money to pay their depositors --> loss of confidence and withdrawing all their money Social effectsLife for the unemployed: People were keeping up appliances because of the work ethic --> psychological impact. Marriages fell from 1.23 million in 1929 to 982K by 32 and birth rate fell from 21.2 per thousand to 19.5 in the same years. Hoboes: Unemployed. By 1932 there were between 1-2 million of them, many of whom lived in shanty towns. The extent of relief: To obtain any relief people had to sell off their assets, use up all their savings, and become destitute. There was a stigma behind receiving relief = people didn't apply. 25% of those entitled to relief received any. - Relief bodies were running out of resources. States received less taxes as unemployment rose, charities received very few donations cause people couldn't afford to. --> Many had to cut rather than expand their services. Charities could only supply 6% of necessary funds in 1932. = Many people went starving and hungry and by 1932 28% of the population received no incomeRural poverty: By 1936 76.6% of farms changed hands and 41.7% of them were forced. Poverty in the midst of plenty: Farm prices were so low that food could not be profitably harvested. E.g in Montana the wheat was rotting the ground meanwhile in Chicago women searched rubbish dumps for anything edible. The longevity of the depressionForeign economic crises: American goods were expensive for foreigners as they hadn't devalued their currency whereas others were losing their value.The nature of American businesses: Competition was limited because the market was controlled by trusts and cartels as they were under the control of individuals. The extent of the depression: The depression hit all industries because of overproduction and underconsumption, therefore there were no employment alternatives because everywhere was suffering. The depression affected both rural and urban parts of the USA. They couldn't help each other. Inadequate government intervention: The government should have made the rich pay more taxes to help make income more equal. undertake public works to increase employment but the opposite was done instead. Monetary policy