The rich stayed rich during the Great Depression by diversifying assets (not just stocks), holding cash, investing in undervalued tangible assets like land and businesses, avoiding heavy debt, and using the crash as an opportunity to buy cheap assets, with some fortunes preserved through cash reserves and smart, contrarian investing in assets like oil and real estate, while others even grew them by buying up failing businesses.
The Great Depression was partly caused by the great inequality between the rich who accounted for a third of all wealth and the poor who had no savings at all. As the economy worsened many lost their fortunes, and some members of high society were forced to curb their extravagant lifestyles.
During the Great Depression, people who made money often did so through essential services (like Joseph Kennedy Sr. in liquor/movies), essential goods (Walter Chrysler with cheaper cars), entertainment (Babe Ruth, Mae West, Glenn Miller**, James Cagney**), innovative industries (William Boeing, J. Paul Getty in oil), or by betting against the market (like Jesse Livermore, Joseph Kennedy), while some criminals like John Dillinger also amassed fortunes. The common thread was providing necessary goods, affordable luxuries, or capitalizing on market downturns.
To protect your assets and wealth from market downturns and economic instability, you can diversify your portfolio, invest in defensive stocks or assets, maintain a long-term investment horizon, and have a solid emergency fund. Seek the advice of a financial advisor.
Many families sought to cope by planting gardens, canning food, buying used bread, and using cardboard and cotton for shoe soles. Despite a steep decline in food prices, many families did without milk or meat. In New York City, milk consumption declined a million gallons a day.
Many people who owned stocks that went down a lot would have been OK eventually, except they bought on margin and were ruined. The best performing investments during the Depression were government bonds (many corporations stopped paying interest on their bonds) and annuities.
By 1933 average family income had tumbled 40 percent, from $2,300 in 1929 to just $1,500 four years later.
Here's a look at some of those investments, along with some others that could mitigate the effects of a recession:
Eighty percent of American families had virtually no savings, and only one-half to 1 percent of Americans controlled over a third of the wealth.
Howard Hughes
In 1932, at the height of the nation's economic woes, he formed the Hughes Aircraft Company. He built the company into a major-league defense supplier and by the time he died in 1976, his fortune totaled a reported $2.5 billion. Maybe there's something to that whole urine saving thing.
Not everyone, however, lost money during the worst economic downturn in American history. Business titans such as William Boeing and Walter Chrysler actually grew their fortunes during the Great Depression.
Popular entertainment in the 1930s included a variety of mediums, such as radio programs, music, dance marathons, and cinema.
John Davison Rockefeller Sr. (July 8, 1839 – May 23, 1937) was an American businessman and philanthropist. He was one of the wealthiest Americans of all time and one of the richest persons in modern history.
The "27.39 rule" (often rounded to $27.40) is a simple financial strategy to save $10,000 in one year by consistently setting aside $27.40 every single day, making it an achievable micro-saving habit to build wealth or an emergency fund. It turns the daunting goal of saving $10,000 into a manageable daily action, emphasizing consistency over large lump sums.
Recession-proof products are consumer staples like food, hygiene, household, and personal care products. Pet necessities like pet food and cat litter are also considered recession-proof.
A precursor of welfare, Home Relief provided a small amount of funds, as well as goods, to families suffering under Depression-era unemployment. Those on relief received $13 a month for rent. In many cases, though, this proved to be insufficient: the average rent on the Lower East Side in 1930 was $18 a month.
It's possible in principle, but we'll have to move fast. If there is a slump that spreads to the first world oustside the U.S., then we have got to cut interest rates, start spending that budget surplus ... The Great Depression would have been easy to stop in 1930. It was very hard to get out of by 1935.