The Great Depression was the worst economic downturn in the history of the industrialized world, lasting from 1929 to 1939. It began after the stock market crash of October 1929, which sent Wall Street into a panic and wiped out millions of investors. Over the next several years, consumer spending and investment dropped, causing steep declines in industrial output and employment as failing companies laid off workers. By 1933, when the Great Depression reached its lowest point, some 15 million Americans were unemployed and nearly half the country’s banks had failed.
What Caused the Great Depression?
Throughout the 1920s, the U.S. economy expanded rapidly, and the nation’s total wealth more than doubled between 1920 and 1929, a period dubbed “the Roaring Twenties.”
The stock market, centered at the New York Stock Exchange on Wall Street in New York City, was the scene of reckless speculation, where everyone from millionaire tycoons to cooks and janitors poured their savings into stocks. As a result, the stock market underwent rapid expansion, reaching its peak in August 1929.
By then, production had already declined and unemployment had risen, leaving stock prices much higher than their actual value. Additionally, wages at that time were low, consumer debt was proliferating, the agricultural sector of the economy was struggling due to drought and falling food prices and banks had an excess of large loans that could not be liquidated.
The American economy entered a mild recession during the summer of 1929, as consumer spending slowed and unsold goods began to pile up, which in turn slowed factory production. Nonetheless, stock prices continued to rise, and by the fall of that year had reached stratospheric levels that could not be justified by expected future earnings.
Stock Market Crash of 1929
On October 24, 1929, as nervous investors began selling overpriced shares en masse, the stock market crash that some had feared happened at last. A record 12.9 million shares were traded that day, known as “Black Thursday.”
Five days later, on October 29 or “Black Tuesday,” some 16 million shares were traded after another wave of panic swept Wall Street. Millions of shares ended up worthless, and those investors who had bought stocks “on margin” (with borrowed money) were wiped out completely.
As consumer confidence vanished in the wake of the stock market crash, the downturn in spending and investment led factories and other businesses to slow down production and begin firing their workers. For those who were lucky enough to remain employed, wages fell and buying power decreased.
Many Americans forced to buy on credit fell into debt, and the number of foreclosures and repossessions climbed steadily. The global adherence to the gold standard, which joined countries around the world in a fixed currency exchange, helped spread economic woes from the United States throughout the world, especially Europe.
Bank Runs and the Hoover Administration
Despite assurances from President Herbert Hoover and other leaders that the crisis would run its course, matters continued to get worse over the next three years. By 1930, 4 million Americans looking for work could not find it; that number had risen to 6 million in 1931.
Meanwhile, the country’s industrial production had dropped by half. Bread lines, soup kitchens and rising numbers of homeless people became more and more common in America’s towns and cities. Farmers couldn’t afford to harvest their crops, and were forced to leave them rotting in the fields while people elsewhere starved. In 1930, severe droughts in the Southern Plains brought high winds and dust from Texas to Nebraska, killing people, livestock and crops. The “Dust Bowl” inspired a mass migration of people from farmland to cities in search of work.
In the fall of 1930, the first of four waves of banking panics began, as large numbers of investors lost confidence in the solvency of their banks and demanded deposits in cash, forcing banks to liquidate loans in order to supplement their insufficient cash reserves on hand.
Bank runs swept the United States again in the spring and fall of 1931 and the fall of 1932, and by early 1933 thousands of banks had closed their doors.
In the face of this dire situation, Hoover’s administration tried supporting failing banks and other institutions with government loans; the idea was that the banks in turn would loan to businesses, which would be able to hire back their employees.
Hoover, a Republican who had formerly served as U.S. secretary of commerce, believed that government should not directly intervene in the economy, and that it did not have the responsibility to create jobs or provide economic relief for its citizens.
In 1932, however, with the country mired in the depths of the Great Depression and some 15 million people (more than 20 percent of the U.S. population at the time) unemployed, Democrat Franklin D. Roosevelt won an overwhelming victory in the presidential election.
By Inauguration Day (March 4, 1933), every U.S. state had ordered all remaining banks to close at the end of the fourth wave of banking panics, and the U.S. Treasury didn’t have enough cash to pay all government workers. Nonetheless, FDR (as he was known) projected a calm energy and optimism, famously declaring "the only thing we have to fear is fear itself.”
Roosevelt took immediate action to address the country’s economic woes, first announcing a four-day “bank holiday” during which all banks would close so that Congress could pass reform legislation and reopen those banks determined to be sound. He also began addressing the public directly over the radio in a series of talks, and these so-called “fireside chats” went a long way towards restoring public confidence.
During Roosevelt’s first 100 days in office, his administration passed legislation that aimed to stabilize industrial and agricultural production, create jobs and stimulate recovery.
In addition, Roosevelt sought to reform the financial system, creating the Federal Deposit Insurance Corporation (FDIC) to protect depositors’ accounts and the Securities and Exchange Commission (SEC) to regulate the stock market and prevent abuses of the kind that led to the 1929 crash.
The New Deal: A Road to Recovery
Among the programs and institutions of the New Deal that aided in recovery from the Great Depression were the Tennessee Valley Authority (TVA), which built dams and hydroelectric projects to control flooding and provide electric power to the impoverished Tennessee Valley region, and the Works Progress Administration (WPA), a permanent jobs program that employed 8.5 million people from 1935 to 1943.
When the Great Depression began, the United States was the only industrialized country in the world without some form of unemployment insurance or social security. In 1935, Congress passed the Social Security Act, which for the first time provided Americans with unemployment, disability and pensions for old age.
After showing early signs of recovery beginning in the spring of 1933, the economy continued to improve throughout the next three years, during which real GDP (adjusted for inflation) grew at an average rate of 9 percent per year.
A sharp recession hit in 1937, caused in part by the Federal Reserve’s decision to increase its requirements for money in reserve. Though the economy began improving again in 1938, this second severe contraction reversed many of the gains in production and employment and prolonged the effects of the Great Depression through the end of the decade.
Depression-era hardships had fueled the rise of extremist political movements in various European countries, most notably that of Adolf Hitler’s Nazi regime in Germany. German aggression led war to break out in Europe in 1939, and the WPA turned its attention to strengthening the military infrastructure of the United States, even as the country maintained its neutrality.
African Americans in the Great Depression
One-fifth of all Americans receiving federal relief during the Great Depression were black, most in the rural South. But farm and domestic work, two major sectors in which blacks were employed, were not included in the 1935 Social Security Act, meaning there was no safety net in times of uncertainty. Rather than fire domestic help, private employers could simply pay them less without legal repercussions. And those relief programs for which blacks were eligible on paper were rife with discrimination in practice, since all relief programs were administered locally.
Despite these obstacles, Roosevelt’s “Black Cabinet,” led by Mary McLeod Bethune, ensured nearly every New Deal agency had a black advisor. The number of African-Americans working in government tripled.
Women in the Great Depression
There was one group of Americans who actually gained jobs during the Great Depression: Women. From 1930 to 1940, the number of employed women in the United States rose 24 percent from 10.5 million to 13 million Though they’d been steadily entering the workforce for decades, the financial pressures of the Great Depression drove women to seek employment in ever greater numbers as male breadwinners lost their jobs. The 22 percent decline in marriage rates between 1929 and 1939 also created an increase in single women in search of employment.
Women during the Great Depression had a strong advocate in First Lady Eleanor Roosevelt, who lobbied her husband for more women in office—like Secretary of Labor Frances Perkins, the first woman to ever hold a cabinet position.
Jobs available to women paid less, but were more stable during the banking crisis: nursing, teaching and domestic work. They were supplanted by an increase in secretarial roles in FDR’s rapidly-expanding government. But there was a catch: over 25 percent of the National Recovery Administration’s wage codes set lower wages for women, and jobs created under the WPA confined women to fields like sewing and nursing that paid less than roles reserved for men.
Married women faced an additional hurdle: By 1940, 26 states had placed restrictions known as marriage bars on their employment, as working wives were perceived as taking away jobs from able-bodied men – even if, in practice, they were occupying jobs men would not want and doing them for far less pay.
Great Depression Ends and World War II Begins
With Roosevelt’s decision to support Britain and France in the struggle against Germany and the other Axis Powers, defense manufacturing geared up, producing more and more private sector jobs.
The Japanese attack on Pearl Harbor in December 1941 led to America’s entry into World War II, and the nation’s factories went back in full production mode.
This expanding industrial production, as well as widespread conscription beginning in 1942, reduced the unemployment rate to below its pre-Depression level. The Great Depression had ended at last, and the United States turned its attention to the global conflict of World War II.
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Soup Kitchens and Breadlines
Farm Security Administration’s Resettlement Administration Photographs
The Great Depression, What Happened, What Caused It, How It Ended
The Great Depression was a worldwide economic depression that lasted 10 years. It began on “Black Thursday," Oct. 24, 1929. Over the next four days, stock prices fell 22% in the stock market crash of 1929. That crash cost investors $30 billion, the equivalent of $396 billion today. That terrified the public because the crash cost more than World War I. The Depression had begun earlier in August when the economy contracted.
- The Great Depression was a worldwide economic depression that lasted 10 years.
- The depression was caused by the stock market crash of 1929 and the Fed’s reluctance to increase the money supply
- GDP during the Great Depression fell by half, limiting economic movement.
- A combination of the New Deal and World War II lifted the U.S. out of the Depression.
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What was the Great Depression?
The "Great Depression " was a severe, world -wide economic disintegration symbolized in the United States by the stock market crash on "Black Thursday", October 24, 1929 . The causes of the Great Depression were many and varied, but the impact was visible across the country. By the time that FDR was inaugurated president on March 4, 1933, the banking system had collapsed, nearly 25% of the labor force was unemployed, and prices and productivity had fallen to 1/3 of their 1929 levels. Reduced prices and reduced output resulted in lower incomes in wages, rents, dividends, and profits throughout the economy. Factories were shut down, farms and homes were lost to foreclosure, mills and mines were abandoned, and people went hungry. The resulting lower incomes meant the further inability of the people to spend or to save their way out of the crisis, thus perpetuating the economic slowdown in a seemingly never-ending cycle.
How high was unemployment during the Great Depression?
At the height of the Depression in 1933, 24.9% of the total work force or 12,830,000 people was unemployed. Although farmers technically were not counted among the unemployed, drastic drops in farm commodity prices resulted in farmers losing their lands and homes to foreclosure.
The displacement of the American work force and farming communities caused families to split up or to migrate from their homes in search of work. "Hoovervilles," or shantytowns built of packing crates, abandoned cars, and other scraps, sprung up across the nation. Residents of the Great Plains area, where the effects of the Depression were intensified by drought and dust storms, simply abandoned their farms and headed for California in hopes of finding the "land of milk and honey." Gangs of unemployed youth, whose families could no longer support them, rode the rails as hobos in search of work. America 's unemployed citizens were on the move, but there was no place to go that offered relief from the Great Depression.
What was FDR's program to end the Great Depression?
With the country sinking deeper into Depression, the American public looked for active assistance from the federal government and grew increasingly dissatisfied with the economic policies of President Herbert Hoover.
In his speech accepting the Democratic Party nomination in 1932, Franklin Delano Roosevelt pledged "a New Deal for the American people" if elected. Following his inauguration as President of the United States on March 4, 1933, FDR put his New Deal into action: an active, diverse, and innovative program of economic recovery. In the First Hundred Days of his new administration, FDR pushed through Congress a package of legislation designed to lift the nation out of the Depression. FDR declared a "banking holiday" to end the runs on the banks and created new federal programs administered by so-called "alphabet agencies" For example, the AAA (Agricultural Adjustment Administration) stabilized farm prices and thus saved farms. The CCC (Civilian Conservation Corps) provided jobs to unemployed youths while improving the environment. The TVA (Tennessee Valley Authority) provided jobs and brought electricity to rural areas for the first time. The FERA (Federal Emergency Relief Administration) and the WPA (Works Progress Administration) provided jobs to thousands of unemployed Americans in construction and arts projects across the country. The NRA (National Recovery Administration) sought to stabilize consumer goods prices through a series of codes. Through employment and price stabilization and by making the government an active partner with the American people, the New Deal jump-started the economy towards recovery.
What did the letters in all those "alphabet agencies" stand for?
The New deal "alphabet agencies":
AAA , Agricultural Adjustment Administration, 1933
BCLB , Bituminous Coal Labor Board, 1935
CAA , Civil Aeronautics Authority, 1938
CCC , Civilian Conservation Corps, 1933
CCC , Commodity Credit Corporation, 1933
CWA , Civil Works Administration, 1933
FCA , Farm Credit Administration, 1933
FCC , Federal Communications Commission, 1934
FCIC , Federal Crop Insurance Corporation, 1938
FDIC , Federal Deposit Insurance Corporation, 1933
FERA , Federal Emergency Relief Agency, 1933
FFMC , Federal Farm Mortgage Corporation, 1934
FHA , Federal Housing Administration, 1934
FLA, Federal Loan Agency, 1939
FSA , Farm Security Administration, 1937
FSA , Federal Security Agency, 1939
FWA , Federal Works Agency, 1939
HOLC , Home Owners Loan Corporation, 1933
MLB , Maritime Labor Board, 1938
NBCC , National Bituminous Coal Commission, 1935
NLB , National Labor Board, 1933
NLRB , National Labor Relations Board, 1935
NRAB , National Railroad Adjustment Board, 1934
NRA , National Recovery Administration, 1933
NRB , National Resources Board, 1934
NRC , National Resources Committee, 1935
NRPB , National Resources Planning Board, 1939
NYA , National Youth Administration, 1935
PWA , Public Works Administration, 1933
RA , Resettlement Administration, 1935
REA , Rural Electrification Administration, 1935
RFC , Reconstruction Finance Corporation, 1932
RRB , Railroad Retirement Board, 1935
SCS , Soil Conservation Service, 1935
SEC , Securities and Exchange Commission, 1934
SSB , Social Security Board, 1935
TNEC, Temporary National Economic Committee, 1938
TVA, Tennessee Valley Authority, 1933
USEP, United States Employment Service, 1933
USHA, United States Housing Authority, 1937
USMC, United States Maritime Commission, 1936
WPA, Works Progress Administration, 1935
WPA, Name changed to Works Projects Administration, 1939
Did the New Deal end the Great Depression?
Roosevelt's New Deal recovery programs were based on various, not always consistent, theories on the causes of the Depression. They targeted certain sectors of the economy: agriculture, relief, manufacturing, financial reforms, etc. Many of these programs contributed to recovery, but since there was no sustained macroeconomic theory (John Maynard Keynes's General Theory was not even published until 1936), total recovery did not result during the 1930s.
Following the 1937 recession, Roosevelt adopted Keynes' notion of expanded deficit spending to stimulate aggregate demand. In 1938 the Treasury Department designed programs for public housing, slum clearance, railroad construction, and other massive public works. But these were pushed off the board by the massive public spending stimulated by World War II. Even after 1938 private investment spending (housing, non-residential construction, plant and equipment) still lagged. It was war-related export demands and expanded government spending that led the economy back to full employment capacity production by 1941.
More Information on the Great Depression:
The beginning ofAmerica's "Great Depression" is often cited as the dramatic crash of the stock market on "Black Thursday," October 24, 1929 when 16 million shares of stock were quickly sold by panicking investors who had lost faith in the American economy. But some sectors of the American economy, such as agriculture, had been in difficulty throughout the 1920s.
At the height of the Depression in 1933, 24.9% of the nation's total work force, 12,830,000 people, were unemployed. Wage income for workers who were lucky enough to have kept their jobs fell 42.5% between 1929 and 1933.
It was the worst economic disaster in American history. Farm prices fell so drastically that many farmers lost their homes and land. Many went hungry.
Faced with this disaster, families split up or migrated from their homes in search of work. "Hoovervilles"-shanty towns constructed of packing crates, abandoned cars and other cast off scraps-sprung up across the nation. Gangs of youths, whose families could no longer support them, rode the rails in boxcars like so many hoboes, hoping to find jobs. "Okies," victims of the drought and dust storms in the Great Plains, left their farms and headed for California, the new land of "milk and honey." America's unemployed were on the move, but there was really nowhere to go. Industry was badly shaken by the Depression. Factories closed mills and mines were abandoned fortunes were lost. Business and labor alike were both in serious trouble.
Unable to help themselves the American people looked to the federal government. Dissatisfied with President Herbert Hoover's economic programs, the people elected Franklin D. Roosevelt as their president in 1932 after a campaign that promised activism and "bold persistent experimentation." Early on in his administration he assembled the best minds in the country to advise him. This group of men was known as the "Brains Trust."
Within one hundred days the President, his advisors and the U.S. Congress passed into law a package of legislation designed to help lift the troubled nation out of the Depression.
Roosevelt's program was called the "New Deal." The words "New Deal" signified a new relationship between the American people and their government. This new relationship included the creation of several new federal agencies, called "alphabet agencies." The AAA (Agricultural Adjustment Administration) was designed to raise farm prices the CCC (Civilian Conservation Corps) to give jobs to unemployed youths and to improve the environment the TVA (Tennessee Valley Authority) to bring electricity to those who never had it before the FERA (Federal Emergency Relief Administration), which later became the WPA (Works Progress Administration), gave jobs to thousands of the unemployed in everything from construction to the arts the NRA (National Recovery Administration) drew up regulations and codes to help revitalize industry and legalized the workers' right to unionize the FSA (Farm Security Administration), which was created later, provided for the resettlement of the rural poor and better conditions for migrant laborers.
Later on came the creation of the Social Security System, unemployment insurance and more agencies and programs designed to help Americans during times of economic hardship.
Under President Roosevelt the federal government took on many new responsibilities for the welfare of the people. The New Deal marked a new relationship between the people and the federal government, which had never existed to such a degree before.
Although the New Deal was criticized by many both in and out of government, and seriously challenged by the U.S. Supreme Court, it received the overwhelming support of the people. Franklin D. Roosevelt was the only president in U.S. history to be elected for four terms of office.
Despite all the President's efforts and the courage of the American people, the Depression hung on until 1941, when America's involvement in the Second World War resulted in the drafting of young men into military service, and the creation of millions of jobs in defense and war industries.
The Great Depression tested the fabric of American life as it has seldom been before or since. It caused Americans to doubt their abilities and their values. It caused them to despair. But they weathered the test, and as a nation, emerged stronger than ever, prepared to take on the new challenges of a world at war.
Impact on Immigration
The Great Depression also had a serious impact on an already xenophobic and exclusionary American immigration system.
As a result of the worsening Depression, President Herbert Hoover instructed the State Department to begin rigorously enforcing a “likely to become a public charge” (LPC) clause from a 1917 immigration law.
This clause was designed to exclude any immigrant who lacked the economic means to be self-sufficient and who could potentially become a financial burden on the state. By 1930, unemployment had reached 8.7%, and consular officials were instructed to more rigidly enforce the LPC clause. They were informed that “any alien wage earner without special means of support coming to the United States during the present period of depression is, therefore, likely to become a public charge,” and should be rejected for an immigration visa.
These regulations, forcing potential immigrants to prove they were financially stable and could support themselves indefinitely without getting a job, limited the number of applicants who qualified for immigration visas. In the 1930s, when the Nazis began stripping Jews of their financial holdings prior to allowing them to immigrate, many had trouble passing the rigorous financial qualifications for entry to America.
Throughout the 1930s, the majority of Americans opposed increasing immigration to the United States. Many cited economic concerns, fearing that immigrants would compete for jobs, which were scarce during the Depression.
What Ended the Great Depression?
There are multiple theories as to what ended the Great Depression, one of which is that when Roosevelt entered office, he immediately began implementing policies that were part of what would be known as the "New Deal."
The first New Deal began in 1933 and focused on economy, the banks and farmers in an attempt to strengthen them at their weakest. The Emergency Bank Act attempted to stabilize the banking system after thousands of failures, while the Agricultural Adjustment Act and the Emergency Farm Mortgage Act aimed to save farmers, their farms and their crops. The first New Deal also helped put an end to prohibition and put together public works projects like the Civilian Conservation Corps.
After a couple of years of passing initiatives to help save businesses and industries, in 1935 the "Second New Deal" began. These initiatives sought to help poor, unemployed struggling Americans. Some programs continued to help farmers, even paying them to plant specific crops. Other sought to improve conditions for workers, like the National Labor Relations Act. Perhaps most importantly, though, the Second New Deal implemented the Social Security Act. In FDR&aposs second term, several programs were colloquially known as part of a "Third New Deal." Programs here would help fund affordable housing and give workers overtime pay.
These programs, and the many others that FDR would go on to implement, stimulated the economy and helped lower the unemployment rate.
World War II
Still, some say that it was instead World War II that ended the Great Depression. Government spending went up significantly when the U.S. joined the war, and unemployment dipped below 1 million unemployed Americans. American soldiers returned home to an economic boom.
What is Black Tuesday?
Black Tuesday is the stock market crash that occurred on October 29, 1929. It is considered the most disastrous market crash in the history of the United States. The Black Tuesday event was preceded by the crash of the London Stock Exchange and Black Monday, and was characterized by panic sell-offs on the New York Stock Exchange Stock Market The stock market refers to public markets that exist for issuing, buying and selling stocks that trade on a stock exchange or over-the-counter. Stocks, also known as equities, represent fractional ownership in a company and dramatic declines in major market indices Dow Jones Industrial Average (DJIA) The Dow Jones Industrial Average (DJIA), also referred to as "Dow Jones&rdquo or "the Dow", is one of the most widely-recognized stock market indices. .
Black Tuesday was the starting point of the Great Depression The Great Depression The Great Depression was a worldwide economic depression that took place from the late 1920s through the 1930s. For decades, debates went on about what caused the economic catastrophe, and economists remain split over a number of different schools of thought. that hit the economies of the United States and other countries across Europe.
Preceding the Black Tuesday Market Crash
The 1920s (also known as &ldquoThe Roaring Twenties&rdquo) were characterized by dynamic economic and socio-cultural growth around the world. The world was recovering from the devastating consequences of World War I, and the population was spending more on consumer goods Gross Domestic Product (GDP) Gross domestic product (GDP) is a standard measure of a country&rsquos economic health and an indicator of its standard of living. Also, GDP can be used to compare the productivity levels between different countries. and boosting economic growth.
The United States, which suffered significantly less than major European countries during World War I, became the largest economy in the world. The US successfully transferred its economy to peacetime conditions. Relatively new industries, such as automobile production, film and radio industries, and the introduction of mass production, fueled consumer spending and the subsequent economic expansion.
The 1920s were also distinguished by constant growth in the stock market. There was a strong public sentiment of an almost perpetual economy and stock market expansion. Amid the economic surge, the stock market&rsquos growth was partially encouraged by speculation. Speculative activities, exacerbated by enormous borrowing carried out to fund the trading of stocks, resulted in the big bubble.
By the end of the 1920s, economic growth slowed down. As there was no support for the further expansion of the stock market, it was only a matter of time before the crash would occur.
Events of Black Tuesday
In September 1929, British financier Clarence Hatry was arrested for allegations of fraud. The event caused a crash on the London Stock Exchange that also changed the optimistic sentiment of American investors. The US stock market became volatile and experienced the Black Monday event on October 28, 1929.
On October 28, the Dow Jones Industrial Average (DJIA) Dow Jones Industrial Average (DJIA) The Dow Jones Industrial Average (DJIA), also referred to as "Dow Jones&rdquo or "the Dow", is one of the most widely-recognized stock market indices. lost 13% of its value. The next day, the decline continued when DJIA fell by another 12%. A panic sell-off of securities that could not be stopped ensued.
Consequences of Black Tuesday
Black Tuesday resulted in devastating consequences not only for the US economy but for other economies around the world. The market crash ended the period of economic growth and prosperity and led to the Great Depression. Black Tuesday triggered a chain of catastrophic macroeconomic events in the US and Europe, which included mass bankruptcies and unemployment, and dramatic declines in production and money supply.
The US stock market fully recovered from the consequences of Black Tuesday only in the 1950s.
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What was the Great Depression and why did it start in the USA?
The depression was caused by a number of serious weaknesses in the economy. Although the 1920s appeared on the surface to be a prosperous time, income was unevenly distributed. The wealthy made large profits, but more and more Americans spent more than they earned, and farmers faced low prices and heavy debt. The lingering effects of World War I (1914-1918) caused economic problems in many countries, as Europe struggled to pay war debts and reparations. These problems contributed to the crisis that began the Great Depression.
America's "Great Depression" began with the dramatic crash of the stock market on "Black Thursday", October 24, 1929 when 16 million shares of stock were quickly sold by panicking investors who had lost faith in the American economy. At the height of the Depression in 1933, nearly 25% of the Nation's total work force, 12,830,000 people, were unemployed.
Wage income for workers who were lucky enough to have kept their jobs fell almost 43% between 1929 and 1933. It was the worst economic disaster in American history. Farm prices fell so drastically that many farmers lost their homes and land. Many went hungry.
Faced with this disaster, families split up or migrated from their homes in search of work. 'Hoovervilles' (named after President Hoover, as an insult), shanty towns constructed of packing crates, abandoned cars and other cast off scraps sprung up across the Nation. Gangs of youths, whose families could no longer support them, rode the rails in box cars like so many hoboes, hoping to find a job. 'Okies', victims of the drought and dust storms in the Great Plains, left their farms and headed for California, the new land of "milk and honey" where they believed all one had to do was reach out and pluck food from the trees. America's unemployed were on the move, but there was really nowhere to go. Industry was badly shaken by the Depression. Factories closed mills and mines were abandoned fortunes were lost. American business and labor were both in serious trouble.
Unable to help themselves the American public looked to the Federal Government. Dissatisfied with President Herbert Hoover's economic programs, the people elected Franklin D. Roosevelt as their president in 1932. Roosevelt was a bold experimenter and a man of action. Early on in his administration he assembled the best minds in the country to advise him. This group of men were known as the 'Brain Trust.' Within one hundred days the President, his advisors and the U.S. Congress passed into law a package of legislation designed to help lift the troubled Nation out of the Depression.
Roosevelt's program was called the 'New Deal.' The words 'New Deal' signified a new relationship between the American people and their government. This new relationship included the creation of several new federal agencies, called 'alphabet agencies' because of their use of acronyms. A few of the more significant of these New Deal programs was the CCC (Civilian Conservation Corps) which gave jobs to unemployed youths and to improve the environment, the WPA (Works Progress Administration) gave jobs to thousands of unemployed in everything from construction to the arts, and the NRA (National Recovery Administration) drew up regulations and codes to help revitalize industry. Later on came the creation of the Social Security System, unemployment insurance and more agencies and programs designed to help Americans during times of economic hardship. Under President Roosevelt the federal government took on many new responsibilities for the welfare of the people. The new relationship forged in the New Deal was one of closeness between the government and the people: a closeness which had never existed to such a degree before.
Although Roosevelt and the New Deal were criticized by many both in and out of government, and seriously challenged by the U.S. Supreme Court, they received the overwhelming support of the people. Franklin D. Roosevelt was the only president in U.S. history to be elected for four terms of office.
Despite all the President's efforts and the courage of the American people, the Depression hung on until 1941, when America's involvement in the Second World War resulted in the drafting of young men into military service, and the creation of millions of jobs in defense and war industries.
32 Great Depression Statistics: Economic Impact, Affected Industries& Recovery
The Great Depression remains as the worst and the longest economic downturn in modern history. The stock market crash of 1929 caught everyone off guard. It also dramatically marked the end of a decade-long economic growth and prosperity that marked the Roaring &rsquo20s.
The following decade ushered the citizens of the United States and other affected countries into extreme suffering. The Great Depression period, however, also sparked fundamental changes in economic policy. During this time, the US government implemented aggressive measures to create a safety net for its citizens and the economy. And in this article, we will help you to look back at this momentous period in history and assess the state of the economy from 1929 to 1939 through a series of relevant Great Depression statistics.
Great Depression Statistics Table of Contents
Black Tuesday and Its Aftereffects
October 29, 1929, also known as Black Tuesday, was the fourth and last day of the worst stock market crash in the history of Wall Street. Unbeknownst to many, this would also kick off a series of unfortunate events that would drag the United States&rsquo economy through its lowest point for decades.
- On Black Thursday (October 24, 1929), 12,894,650 shares were traded.
- During Black Tuesday (October 30, 1929), 16,410,030 shares were traded on the New York Stock Exchanges, prompting the stock market to crash.
- Stock prices rose in 1932 but only for 20% of their value in the summer of 1929.
- According to Dow Jones Industrial Average (DJIA), the stock market peaked at 381.17 on September 3, 1929, and bottomed at 41.22 on July 8, 1932.
- The American stock market plunged by nearly 90% within three years and would not recover for almost 25 years.
- The industrial production output suffered the worst decline at 47%.
- The wholesale price index suffered a 33% decline.
- The industrial economic output of the US was reduced by nearly 50%, which amounted to $55 billion.
- Gross domestic product (GDP) suffered its lowest point at 30%.
Source: Bureau of Economic Analysis
Impact on the Labor Force
Men made up the majority of the labor force. With the economic collapse hitting industrial labor the hardest, a lot of families had to rely on women because the majority of the jobs available were domestic work. The rise in employment for women shook the norms of gender roles, sometimes leaving husbands more worried about losing their authority over their wives than having food on the table.
- Following the stock market catastrophe, wages suffered a 42% cut.
- Women&rsquos employment rate rose from 10.5 million in 1930 to 13 million by 1940.
- In 1933, nearly 25% of the US workforce was unemployed.
Source: Bureau of Labor Statistics
Multiple Bank Runs
The stock market crash triggered mass anxiety over financial security. Consumers were spending less and less furthermore, investments were being pulled out of business ventures. The unhealthy circulation of money, or lack thereof, resulted in bankruptcies and financial institutions like banks were no longer seen as trustworthy as before. In 1930, depositors began withdrawing their funds all at once, forcing banks to liquidate loans and sell assets even at bargain prices, thus resulting in bank failures.
- Approximately 650 banks closed in 1929, which grew to 1,300 banks in 1930.
- The biggest bank failure in the history of the US happened in 1931 when New York&rsquos Bank of the United States collapsed. At the time, the bank held more than $200 million in deposits.
- A total of $2 million was withdrawn from New York&rsquos Bank of the United States in a single day.
- A total of 9,000 banks failed from the beginning of the Great Depression to 1939.
- An estimated number of 4,000 banks failed in 1933 alone.
- Also, during 1933, around $140 billion worth of bank deposits were lost due to bank failures.
The Tale of Two Presidents
President Herbert C. Hoover&rsquos inopportune time in the office would play a major role in the actions taken by the government in the wake of the Great Depression. To combat the worsening impact of the economic downfall, he focused on extending federal control over spending, wage policy, tax policy, agriculture, international trade, and immigration. The increase in federal spending he implemented, however, only increased budget deficits.
- During President Hoover&rsquos tenure, the total increase in spending reached 48% in four years.
- The budget deficit of 1931 was 52.5% of the total expenditures and 43.3% in 1932.
- Federal debt ballooned to $48.2 billion in 1939 and $50.7 billion in 1940.
When Franklin D. Roosevelt took office in 1933, he enacted a series of reforms and policies to reduce the unemployment rate and start the process of reviving the economy. Called the &ldquoNew Deal,&rdquo the series of programs included amendments to fiscal policy, banking and monetary reforms, public works, farm, and rural programs, and trade liberalization, which helped lay down a more robust economic foundation. The New Deal also helped establish a stronger labor movement and the Social Security Act, both of which would leave a lasting impact and shape today&rsquos labor and insurance policies.
- The New Deal programs by President Roosevelt reduced the unemployment rate in 1934 by 3.2%.
- In 1938, President Roosevelt passed the Fair Labor Standards Act (FLSA) as part of the New Deal, which set the first minimum wage in the US, which amounted to .25/hour.
- Union membership rate increased from 1 in 8 workers in 1930 to 1 in 4 workers in 1940.
Source: US Bureau of Labor Statistics
In 1936, a survey conducted with the Works Progress Administration (WPA) gathered the following information from more than 6,000 contractors in the building/construction industry that worked on more than 13,000 projects in 105 cities all over the US:
- 186,145 workers had an average earning of $ 0.918 per hour.
- The average earning for bricklayers, electricians, and structural ironworkers was more than $1.30 per hour.
- Laborers&rsquo average earning was $ 0.516 per hour.
- Another survey, this time conducted by the US Bureau of Labor Statistics in 1937, showed that 95% of salaried workers employed by 90,000 firms were entitled to paid annual vacations.
Businesses That Survived the Depression
The Great Depression era was not entirely wrought with failures. Some businesses managed to thrive amid the biggest economic crisis in history. At the time when office establishments were barely operational, and the number of banks closing was growing drastically, IBM launched the 801 Bank Proof Machine. This equipment was an automated check-processing machine developed by Lincoln Fuller modeled after IBM chairman and CEO Thomas Watson Sr.&rsquos idea of equipment for the &ldquodemands of the future.&rdquo
- Within four years, IBM installed 500 proof machines with over 140 clients, resulting in millions of dollars in revenues from proof machines alone.
Automotive was among the industries that suffered tremendous losses during the Great Depression period.
- The sales of brand new automobiles slid by 75% from 1929 to 1932.
- Automotive companies suffered a combined loss of $191 million within three years.
- GM implemented a 70% cut on the price of expensive vehicles to reduced inventories.
General Motors (GM), Ford, and Chrysler dominated the auto industry. Among them, only GM and Chrysler managed to thrive, with Ford Motors barely making it. The reason behind GM&rsquos and Chrysler&rsquos growth during the Great Depression period was their ability and willingness to adapt to the changes. GM shifted the production from manufacturing high-end units to affordable vehicles, targeting the lower end of the market to reduce losses.
October 24, 1929: Black Thursday! Great Depression Begins
On October 24, 1929, the New York Stock Exchange suffered the catastrophic day of losses known as Black Thursday, the day that for all intents and purposes started the Great Depression. Also known as The Great Crash or The Crash of ’29, this was the most significant stock market crash and economic event in the history of the United States, so enormous in scope that it plunged the entire industrialized world into a decade long depression.
The 1920’s in the United States was a time of excitement and prosperity. Women could vote, Prohibition went into effect, movies became common, voice radio entertained people in their own homes and millions of people invested in a stock market that seemed like the only direction was up. This investment was largely made on “spec,” short for speculation, where the investor did not really put up money, but on paper bought the stock and sold it at a profit before his payment was due, allowing people to make money even though they did not personally have the money to invest. This “house of cards” so to speak was bound to fail.
Poster for the movie The Jazz Singer (1927), featuring stars Eugenie Besserer and Al Jolson. Warner Bros. (original rights holder)
The US Federal Reserve Commission warned of the dangerous nature of excessive speculation months before the crash, but like Cassandra, the Fed was doomed to be ignored. Throughout the summer of 1929 there were ominous hints of trouble, with auto and steel production declining, construction slowing, and personal and corporate debt piling up because of easy credit with low interest rates. The entire country was getting dangerously under capitalized. The Dow Jones Industrial Average stock indicator peaked on September 3, 1929 (at 381.17), causing some prognosticators to crow about a rosy future and others to warn of an impending crash. The London Stock Market crashed on September 20, 1929, and a sell off began in the US, driving stock prices down. The mixed messages from “experts” resulted in some US gains, and the market fluctuated wildly.
By October 24, 1929, at the opening bell of the stock session, the NYSE lost 11% of its value immediately upon the open. The unprecedented heavy trading overwhelmed stock tickers, and people received reports of market conditions hours late. The massive sell off triggered panic selling, which was partially stemmed by financiers pouring money into the market, buying up major stocks to prop up the stock market. This resulted in something of a rally that partially continued on Friday, October 25, 1929, but on the following Monday, October 28, 1929 now known as Black Monday, things had regressed to more panic selling resulting in a loss of 13%. The following day, not surprisingly known as Black Tuesday, the market lost another 12%. The record volume on Black Tuesday was not matched for 40 years.
Crowd gathering on Wall Street after the 1929 crash.
The market fluctuated for the next few months, but the damage was done. So many people and companies were ruined that the Great Depression would not end until World War II firmly planted the United States as the world’s only industrial giant not ravaged by the war. Historians and economist debate the reasons for the crash and the results rather enthusiastically to this day, and there is much disagreement on the hows and whys of this disaster. Apparently not a heck of a lot was learned, because in 2008 we suffered another giant stock market economic catastrophe that we are still suffering for.
Question for students (and subscribers): Will we ever learn? Give us your opinions on this subject in the comments section below this article. Note: If black ink means profit, and red ink means loss, why do we not call these terrible days Red Thursday, Red Monday, etc? Just wondering…
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Great Depression: Black Thursday, Facts and Effects - HISTORY
"I landed in Canada, a refugee from unemployment and want in England with the youthful naïve idea of finding work and prosperity in the new country . It soon became apparent that here also there were no jobs and for a couple of days I hung around the CPR depot, dozing on benches." - Ron Liversedge
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Canada was one of the hardest hit by the economic crisis. The country relied heavily on its exports. Pulp and paper, wood and wheat represented two-thirds of Canadian exports and accounted for much of the country's prosperity. With the onset of the global Depression, countries adopted protectionist measures to defend their own markets.
The crisis hit every economic sector in Canada including agriculture, industry, commerce and services. By 1933, three in ten Canadians were out of work. With few government assistance programs, thousands of men criss-crossed the country, looking for work, which didn't exist, and food and shelter, which was increasingly scarce.
Those with jobs were desperate to keep them. Textile mills took advantage cheap labour, and adult workers were replaced by girls as young as 15, who would do the job for about half of what the men earned.
The Dust Bowl
The Canadian prairies experienced some the toughest times. In the first three years of the Depression, the price of wheat tumbled from $1,23 a bushel to 29 cents in 1932. And in 1929, an unprecedented decade of drought set in on parts of the prairies. The once-lush fields dried up and the cropped burned in the sun
In 1937, the world economy began to straighten out even though the international markets were less active. In 1938, industrial countries resumed their economic development but Canada remained behind the others. It would take Canada two more years to pull of the Great Depression. And this was at a high cost. By 1940, Canada transformed from an economy in crisis to an economy of war.