Business Failures

By Brendan Foley, Matthew Yao, and Aakansha Jain

The Crash of 1929 & The Great Depression (PBS) 4of6

Business Production from 1929 to 1932

Business production decreased because there was less money in the economy because of bank failures. There was also a rise in unemployment. In 1929 the annual production was $104 billion and in 1932 the production fell to $56 billion and during those same years there was an increase business failures from 106 in 1929 to 155 in 1932.

The 1930's Great Depression was unlike any other recession that America had suffered below. America would have to endure a period marked by the highest and worst unemployment rate. One of the greatest causes of the Great Depression was that prosperity from the boom of the Roaring Twenties was not spread evenly among workers. Thus, farmers, workers of in the coal, railroad, and textile industries were laid off. Industrial production increased by fifty percent, but because laborers could not afford to buy these goods, there was a lot more supply than demand.

Did business failures generally increase or decrease from 1920 to 1932?

  • From 1920 to 1922 it rose greatly, but then it dropped in one year and after that it remained slightly rising until 1929. Starting in 1929 and lasting until 1932, the number of business failures climbed to more than triple the total from 1920.
  • (A general increase in business failures from 1920 to 1932.)
  • 1929's Black Tuesday does not signify the beginning of the Great Depression in the case of business failures. Businesses were shutting down by the thousands even during the roaring twenties. Farmers suffered overproduction and new industries were replacing old ones (ex. the automobile industry replaced the steel industry).
  • It can be speculated, however, that the brief declines in business failures was also a result of the roaring twenties. New industries had caught the public's attention and held onto it. These new industries included radios and "talkies" (movies) to automobiles and electric companies.

What year was the depression was the most severe?

In 1932 the Depression really peaked and reached its worse part. The number of business failures per 10,000 was over 150, and it had never been close to that high before. Banks, factories, and stores closed rapidly every month from 1929 to 1932 and millions of people lost their jobs (unemployment reached up to 25%). The Depression for business owners and bankers started to die down when President Roosevelt took office in March 1933.

Why did businesses fail so badly during this time?

As unemployment rose to a staggering 25%, people starting losing all their money and therefore could not spend anything. Profits were not realized by businesses because people lacked money to spend on business.

The Difficulties Hoover Faced in Trying to get Reelected

Hoover initially believed in laissez faire economics - he believed that the economy and the business would be able fix themselves without the help of the government. Hoover thought that state and local governments should help the businesses, but also suffered financial problems. His most successful antidepression measure was the Reconstruction Finance Corporation (RFC) which lent money to banks, railroads, and large institutions. Americans did not vote Hoover back into office because they thought he didn’t do much to try and help America out of the depression.

In an attempt to revitalize the economy, Hoover initiated the Smooth-Hawley Tariff which would dramatically raise tariffs. The Bill had actually halted trade with foreign nations to standstill.

Nevertheless, the Hoover Administration, through its efforts such as the RFC did prove for the first time, the U.S. government`s willingness to assume responsibility for rescuing the economy by overt intervention in business affairs.

Works Cited

Picture Sources:

The Great Depression . N.d. Library of Congress, Washington . Library of Congress. Web. 21 Mar. 2013.

MLA Sources:

Bailey, Thomas Andrew, David M. Kennedy, and Lizabeth Cohen. The American pageant. 11th ed. Boston: Houghton Mifflin, 1998. Print.

"Economy in The Great Depression."Shmoop: Homework Help, Teacher Resources, Test Prep. N.p., n.d. Web. 22 Mar. 2013. <>.

Sobel, Robert. "The Great Depression, business slump of the 1930's." U.S. History and The

Constitution. N.p., n.d. Web. 21 Mar. 2013. <>

The Great Depression. Dir. Henry Hampton. Perf. N/A. PBS Video, 1993. Film.