Why Bank Panics Matter by Frederick Betz

Author:Frederick Betz
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

But the impact upon employment of people in cities was even more severe. Up until 1930, 79 % of the population had earlier been employed in industry. When unemployment reached 22.5 % in 1932, this meant that about 27.5 % of the city folk were unemployed (assuming the farmers remained employed on the farm, if they had not lost their farm).

This was a big structural change in a society—to have more than a quarter of the city folk out of work. This stasis change after 1929 altered the US economy into a state of “structural unemployment”—when at least one-quarter of a working population is unemployed in a nation.

As jobs were lost, consumer consumption fell when families of the unemployed had no income to purchase necessities. Then prices in commodities also fell as consumption fell. This followed in the pattern of the classical supply–demand equilibrium pricing theory of economics. One can see this for agricultural prices, as shown in Fig. 6.7.

Fig. 6.7 Source: http://​en.​wikipedia.​org/​wiki/​File:​US_​Farm_​Prices_​%281928-1935%29.​JPG, 2012

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