The diploma thesis explains the reasons for crisis in iron industry in Železniki and Kropa and, consequently, its decline. The purpose of this research is also to present how the crisis influenced the local population. For many years, ironwork and nail making had been the main industry branch and the main source of earnings of the inhabitants of Železniki and Kropa. When the industrial revolution and the development of industrial production emerged, making nails by hand could not bear the increased competition of machine production. Industrial development in surrounding areas had a negative impact on Železniki and Kropa, which both stayed focused on handmade production. Additionally, the development of railway system caused the stagnation in towns, which were not included into the railway area. The decline of iron industry in these towns was also a consequence of merging the Carniolan ironworks into Kranj Industrial Corporation in which Železniki and Kropa were not included. Gradually, the ironwork started to decline. Consequently, the blacksmiths found themselves in poverty, since they did not have any opportunities to work and earn money. The crisis had an influence on population dynamics. The attempts to save the declining ironworks were unsuccessful. At the turn of the century, the blast furnaces definitively stopped functioning. The ironwork cooperative managed the nail making craft in Kropa to keep working, but in Železniki that decayed as well.