During the 1920's, economy was booming. There was so much money in the system, nobody had doubts. Many people invested in the stock market and many people made loans. Although everything seemed great, as the years went on, people started to realize something bad was going to happen and tried to cash in their stocks as soon as possible. When the stock market crashed, the economy went into a downward spiral. Many businesses started to close and layoff there workers. The unemployment rate increased 25%. There were many cutbacks in pay and hours. The people most affected by the crash were stockbrokers and bankers. When the crash hit, many stockbrokers were not able to collect their debt and went into bankruptcy. As people went as fast as they could to get there saving out of the bank, banks were unable to give people back their money due to unpaid loans. The banks owned bad investments in the stock market. During the great depression, the economy took a turn for the worst.
Role of Government
During the 1920's, the role of the government was very little. Laissez faire policy was still in affect and everyone thought it was working fine. President Hoover was a terrible president who would not do anything to help the country. When the great depression hit, people started to panic and Hoover did nothing. Over 1000 soldiers marched to the white house and demanded their pay but Hoover barricaded himself in the white house and sent military force to stop the soldiers. Once FDR came into office, people had hope, He removed the Laissez faire policy and promised American people he would come out with the new deal. In the new deal, there were 3 words he followed, recovery, reform, relief. The groups most affected by this were the Business owners and industrialists. During the new deal, business owners got little to no help at all. They disagreed to some acts proposed and fought the system. Industrialists also did not benefit a lot out of the new deal. They also fought the system.