Pictured: The credit crunch tent city which has returned to haunt America

A century and a half ago it was at the centre of the Californian gold rush, with hopeful prospectors pitching their tents along the banks of the American River.

Today, tents are once again springing up in the city of Sacramento. But this time it is for people with no hope and no prospects.

With America's economy in freefall and its housing market in crisis, California's state capital has become home to a tented city for the dispossessed.

Rich and poor: The tents and other makeshift homes have sprung up in the shadow of Sacramento's skyscrapers

Shanty town: The tent city is already home to dozens of people, many left without jobs because of the credit crunch

Those who have lost their jobs and homes and have nowhere else to go are constructing makeshift shelters on the site, which covers several acres.

As many as 50 people a week are turning up and the authorities estimate that the tent city is now home to more than 1,200 people.

In a state more known for its fantastic wealth and the glitz and glamour of Hollywood, the images have shocked many Americans.

Conditions are primitive, with no water supply or proper sanitation.

Many residents have to walk up to three miles to buy bottled water from petrol stations or convenience stores.

Ben Cardwell, carries supplies to his tent at a homeless settlement

Tammy Day, a homeless woman, cooks potatoes on a campfire at the site

At other times, charity workers arrive to hand out free food and other supplies.

Joan Burke, who campaigns on behalf of the homeless, said the images of Americans living in tents would shock many.

'It should be an eye- opener for everybody,' she said. 'But we shouldn't just be shocked, we should take action to change things, because it's unacceptable.

'It is unacceptable that in this day and age we have gone back to a situation like we had during the Great Depression.'

Homeless: Keith and Tammy Day cook dinner

Authorities in Sacramento, where Governor Arnold Schwarzenegger has his office, admit the sight of families living in such poverty is not pretty.

But faced with their own budget crisis and a £30billion deficit, they have had little choice but to consider making the tent city a permanent fixture.

The city's mayor Kevin Johnson said: 'I can't say tent cities are the answer to the homeless population in Sacramento, but I think it's one of the many things that should be considered and looked at.'

Shanty towns sprung up during the Great Depression as people lost their jobs and homes

Migrant Mother: Dorothea Lange's famous photograph from the Great Depression features Florence Owens Thompson, 32, a mother-of-three who had just sold the family's tent to buy food

As America's most powerful state California had the same gross domestic output as Italy and Spain, but it has been among the hardest hit by the recession and housing crisis.

Foreclosure rates last year rocketed by 327 per cent, with up to 500 people a day losing their home.

Coupled with massive job cuts that have seen one in ten workers laid off, many people who once enjoyed a middle class existence are now forced into third world conditions.

Former car salesman Corvin and his wife Tena are among the newest residents of the tent city.

Tent city residents queue up to receive supplies handed out by a local charity

The couple, who are in their fifties, lost their home and jobs around the same time.

With homeless shelters full in Sacramento, they had little choice but to use what savings they had left to buy a tent.

The couple admit they have yet to tell their grown-up children about their hand-to-mouth existence.

Tena said: 'I have a 35-year-old son, and he doesn't know. I call him, about once a month and on holidays, to let him know that I'm well and healthy.

'He would love me anyway, but I don't want to worry him.'

The shame of Sacramento's tent city was given a much wider airing after it was featured on the Oprah Winfrey show which is watched by more than 40million people a week.

Many of those who have found themselves homeless worked in the building trade.

But with no new home builds and as many as 80,000 people losing their job every month, there is little chance of employment. Governor Schwarzenegger last month approved a budget to address the state's deficit, ending a three-month stalemate among lawmakers.

As well as increasing taxes, he has imposed drastic cuts in education, healthcare and services that will affect everyone living in the state.

Many of those living in the tent city are pinning their hopes on President Obama's $787 billion stimulus package which is aimed at rescuing the economy and creating jobs.

The President has also announced plans to save the homes of nine million people from foreclosure by restructuring their mortgage debt.

Source: http://www.dailymail.co.uk/news/worldnews/article-1159677/Pictured-The-credit-crunch-tent-city-returned-haunt-America.html