After the war ended in 1918, it left the USA as the greatest economic power in the world. It had not experiences the financial and physical damage that other European nations had. Industries had been boosted by war time production and they were owed a colossal amount of money by other countries. In 1928, the USA was still enjoying the effects of the economic boom, whilst Herbert Hoover was elected president. He predicted an end to poverty in the USA.
However, in 1929, the Wall Street stock market crashed. It was said to have occurred for many reasons, including the decrease in demands for American products by the end of the 1920s. In autumn 1929, profits weren’t made by American firms for some reason, cautious investigators began to realise that falling profits would lead to a drop in share prices, therefore people began to sell their shares.
As a result of all this, the Great Depression followed up. This made 13 million people unemployed. Unemployment worsened with the non-available alternate jobs and total dependency on primary sector industries. There were many more factors as to why unemployment had doubled: Cut backs in business and government expenditures, low credit availability that added to debt by borrowing and deflation in prices of consumer goods, made worse by the drop in wages.
In 1929, the rate of unemployment was 3.2%, a year later it rose to 8.9% due to the effects of the Great Depression. Every year after that it rose drastically, 1933 being the highest unemployment rate of the decade at 24.9%. From then on the rate slowly decreased but still, ten years later in 1939 it was incredibly high at 17.2%.
Also, as a result of the unemployment, people could not afford to pay the mortgages on their homes, and were forced to stay in Hoovervilles. A Hooverville was a shanty town built by homeless people during the Great Depression. They were named after