On October 29, 1929, which would come to be known as Black Tuesday–the New York Stock Exchange crashed, sending stocks into a dizzying tailspin. The Twenties had been a decade of industrialization and huge economic growth. Because the Stock Market seemed so healthy, many Americans invested their life savings and took risks. On October 29th, however, the bottom fell out of the stock market, and prices dropped dramatically. When the final bell rang that Tuesday, the New York Stock Exchange had lost four billion dollars. Within days, panic ensued, and banks failed. Many people lost their life savings. More than any other day, October 29th marked the beginning of the Great Depression.
It did not take long for sectors outside of the finance world to be affected by the severe economic downturn. Record sales began to plunge and TOBA shows were canceled. By 1930, Bessie Smith found herself adjusting to a new touring schedule. Record sales had slowed considerably and she had to rely entirely on shows in order to make ends meet. In the past, while passing through Chicago, Smith had always shared a drink or two with a bootlegger named Richard Morgan. In the early years of the Great Depression bootleggers were among the few people still making money. Morgan had long been an admirer of Bessie Smith's, and when they reunited in 1930, they began a relationship. Morgan proved a better match for Smith in temperament than Jack Gee. Morgan was a quiet, tolerant man who took her raucous behavior and heavy drinking in stride.
Meanwhile, Vaudeville theaters–Bessie's main venue–were closing all over the country. The struggling TOBA was forced to fold, and Smith was left to book her own shows. Ethel Waters, who was in Paris during the crash, returned to star in "Rhapsody in Black" on Broadway. While Smith cut corners to get by, Waters was making $2000 a week in the middle of the Great Depression. For the first time, it became apparent how Smith's earlier rejection of the white world could hurt her.
In July 1930, Smith recorded "Black Mountain Blues" for Columbia. Columbia, however, hit hard by the economic crisis, only printed 2095 copies. It was a far cry from the 780,000 copies of "Downhearted Blues" that Bessie had sold in 1923. In 1931, Smith began her ironically named "Broadway Revue" tour, and in November of that year, she recorded her last two songs– "Safety Mama" and "Need a Little Sugar in my Bowl"–for Columbia Records. After nine years, 160 songs, and hundreds of thousands of records sold, Columbia terminated its contract with Bessie Smith. Because of the royalty clause in her contract, Smith received only a fraction of the money that she should have received for her hits.
All through 1930 and 1931, Jack Gee, Jr.. was in a boy's home in Maryland, away from his mother. In 1932, he was discharged to Jack Gee. Jack Gee, Jr. wrote to Smith, telling her how miserable he was. Smith, accompanied by a sizeable group of male friends, traveled to Gee's at once to fetch Jack, Jr. and brought her son back to Philadelphia. Although Smith had high hopes for Jack, Jr. –in particular, she wanted him to be a lawyer–Jack, Jr. had no interest in school or in settling down to a regular life. Like his mother, he was apt to disappear for days at a time.
Bessie's hatred for Gertrude Saunders continued despite the fact that she was in a relationship with Richard Morgan. When Smith and Saunders ran into each other in a small midwestern city, Smith beat Saunders badly.