What did people invest there money in during the depression?

Question

You know the time when the country had no money.

Answer 1

Precious metals and gems, if people could afford to. The problem was the stock market running uncontrolled on how much an investor could borrow to buy stock, a purchase on "margin" in which the stock was used as collateral for the loan plus a small amount of cash to buy it. Stocks were artificially inflated and bought on margin at outrageous prices, often for a few real pennies on the inflated dollar value. When the stocks dropped even a little, the broker called in the margin to avoid losses and forced a sale at current price to recover their money. The problem is they had to sell at a relatively large loss, which meant the broker was out the difference. Enough of these calls started flowing to cause massive bankruptcies because the broker could not cover the losses, which eventually resulted in deflation of the currency, which meant each dollar bought less and less in the marketplace, resulting in a downward spiral. People could not pay back loans from banks, so banks folded, resulting in an increase in the downard spiral when people lost their bank savings. The only currency which retained any value was directly tied to precious metals. At the time our currency was backed by silver and gold in the treasury, which eventually stopped the downward spiral, but it took years to stabalize. My parents told me of all this and since this is a second hand version, I may very well have the details wrong. They could not trust the banks since so many folded, so they learned to keep everything in hard currency under the mattress. My parents lost almost all of the money they had in the bank. When banks started to fold, people would go to their bank and withdraw their money. The banks did not have the cash money to pay out all that they owed for deposits since they had invested that cash in loans to people for mortgages and the like. The term was "a run on the bank" when people went to withdraw funds enmass. It was at a point that the content of silver coins as melted silver was worth more than the face value of the coins for a short period. My parents had most of their wealth (what little they had left after the bank folded) tied up in jewelry and property and scrimped and saved like crazy to keep up the mortgage on the house. Once the Government regulated the stock market and banks, things started a slow recovery. This situation is not likely to happen again because of the current regulations regarding trading of stocks and cash reserves required for banks. Apparently, this all started with uncontrolled speculation in the stock market and had a domino effect once it tipped, even a little. It was about this time that "plug" nickels made an appearance. People would cast coins made of lead and dipped in mercury to mack them shiny. There were two ways to tell a counterfeit coin, drop it and bite it. A counterfeit was soft, so biting would leave a mark. The other way was to drop the coin on a thard surface and listen to the sound. A real struck coin has a ring which a countefeit will have a dull thunk. There was a third way, weight, but it was hard to tell without a balance scale to actually measure the weight of the coin against a true known good coin.

Answer 2

Food, rent, property taxes (if they still had a home) and medical bills.

The whole point of a depression is that no one has money to invest and few have money to pay their most basic bills.

Just as a clue, the next time that you see "The Waltons" in your TV listing, watch it. It's a family drama that had a long TV life, set between 1935(?) and 1947. The earlier years will greatly help your education.

Answer 3

Last recession I think Anhueser Busch did well, but no. It's a defensive stock and will not lose as much as others. Investors siad Sin industries profits are stable during econimc troubles. A bad year for bear companies is a 5% drop oppose to 30% for retail.

Answer 4

The people with no money were lucky if they could invest money in their next meal during the depression.

Answer 5

I think a lot of people at that time sort of kept their money at home. They had lost faith in the banks and had little trust in corporations. I know that to this day my grandfather, who is 87, still keeps money in jars in the basement. Of course they have a bank account and some savings but he hasn't forgotten the time when it was actually safer to keep your money at home under your own car than keeping it in the bank.

Answer 6

Most people didn't have any to invest. 200,000 people were starving just in Arkansas. There were food riots in south Arkansas, and Oklahoma moved to California.

People didn't trust banks or the stock market. Most of them if they had any cash kept it at home. Buried in fruit jars, hidden in walls and stuffed in mattresses.

A friend of mine was helping his girl friend remodel an old house and found jars of silver and gold coins hidden in the walls. You know our Great President FDR made it illegal for private citizens to own gold.

Answer 7

Food

Answer 8

They didnt. They put cash in glass jelly jars and buried them because banks couldnt be trusted. They still find them from time to time, but there is no way to bury paper money for so long that it doesnt destroy it over time.

Answer 9

>If they were lucky enough to have any money, they invested it in food, shelter and clothing.<

Answer 10

Bonds were a big deal back then.