The Great Depression
A worldwide economic downturn, the Great Depression
started in 1929, kicked off with the U.S. stock market crash, known as
Black Tuesday, on October 29th. It was the largest and most
severe economic depression in the 20th century.
Effecting virtually every country and both the rich and
poor, the depression had devastating outcomes in international trade,
personal income, prices, and profits. People of all walks of life were
hit hard, especially those dependent on heavy industry, construction,
farming, and mining.
The causes of the Great Depression were many and
varied, beginning with rapid economic growth and financial excess of
the "Roaring Twenties.” Excess applied not only to spending, but also
to a change of values with women smoking, drinking, and
wearing short skirts.
During this time, many Americans were quickly buying automobiles,
appliances, and speculating in the stock market. Unfortunately, much
of this wild spending was done on credit and while businesses were
making huge gains, the average workers’ wages were not increasing at
anywhere near the same rate.
Migrant Mother, 1936 by
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But, like other "booms” throughout history, the cycle soon
led to a "bust.” As manufacturing output continued and farmers were
over producing, circumstances began to change, leading to falling
prices and rising debt. At the same time, there was a major
banking crisis, including "Black Tuesday" as well as serious policy
mistakes of the Federal Reserve Board, which led to a fall in money
supply. Making matters worse for farmers, the "Dust
Bowl Days" hit in
the 1930's, caused by severe drought and decades of extensive farming
without crop rotation.
demand for products, bank failures, and global overinvestment,
businesses began to lay-off employees in the thousands. However,
optimism of some major politicians and businessmen remained. Early on,
John D. Rockefeller, an American industrialist, said: "These are days
when many are discouraged. In the 93 years of my life, depressions
have come and gone. Prosperity has always returned and will again.”
President Herbert Hoover, underestimating the
seriousness of the crisis, called it "a passing incident in our
national lives," and assured Americans that it would be over in 60
days. He was wrong.
The decline in the United States
economy initiated a downturn in other countries before their own
internal weaknesses or strengths determined if their fate was to be
better or worse than that Americans were suffering.
U.S. Government response to
the crisis made the situation worse and resulted in American’s loss
of confidence in the nation’s economic future. Protectionist policies
like the 1930 Smoot-Hawley Tariff Act, which raised U.S. tariffs on
over 20,000 imported goods to record levels, resulted in retaliation
against U.S. Industries, strangling global trade. Industries that
suffered the most included agriculture, mining, logging, durable
goods, construction, and automobiles.
The depression caused major political
changes including President Herbert Hoover’s loss in the presidential
election of 1932 to Franklin Roosevelt. The lowest point of the
depression was during the winter of 1932-33, but Roosevelt’s economic
recovery plan, called the "New Deal," began to turn the nation around.
Roosevelt implement several new programs such as the National Recovery
Administration (NRA), which sought to stimulate demand and provide work
and relief for the poor through increased government spending. Other
relief and recovery measures included the Civil Works Administration (CWA)
and the Public Works Administration (PWA), along
with the use of previous agencies such as the Reconstruction Finance
Corporation, to regulate and stimulate the economy. In 1935, more programs
were added including the Works Progress Administration (WPA) and a
national relief agency through the National Labor Relations Board, which
provided a strong stimulus to the growth of labor unions.
During Roosevelt’s first term,
unemployment fell by two-thirds and sustained improvement for five
years, when the Recession of 1937 brought back 1934 levels
by May, 1938 retail sales began to increase, employment improved, and
industrial production was on the rise. After the recovery from the
Recession of 1937, conservative politicians were able to stop further
expansion of the New Deal, abolishing many of the programs.
Great Depression ended at
different times in different countries with the United States finally
ending in 1941 with America's entry into World War II.
During the peak years of the
Depression, some 13 million people were unemployed in the United States,
industrial production had fallen nearly 45%, homebuilding by 80%, 5,000
banks had failed, the stock market had lost almost 90% of its value, and
over a million families had lost their farms.
During these turbulent times,
individuals were affected not only financially, but also psychologically
as unemployment caused self-blame and self-doubt. Men were harder hit than women,
as they were expected to provide for their families and it was humiliating
for them to ask for help. Ironically, while millions of men were out of
work, the percentage of women working during the
especially under the New Deal programs. And due to extremely low wages,
children could sometimes find work when their parents could not.
African Americans and other minorities suffered more than whites,
as their jobs were often taken away and given to white people. In 1930, 50% percent of
African Americans were unemployed.
Great Depression and the New Deal
changed the relationship between Americans and their government, with
the people now expecting government involvement and responsibility in
caring for the needy and regulating the economy.
It also created a liberal political alliance of labor
unions, an acceptance of women working, African-American rights, and
unfortunately, a new generation of outlaws and gangsters who profited
during a time that others were starving.
These, including such infamous
people as Bonnie and Clyde,
John Dillinger, and dozens of others,
operated in what is sometimes referred to as the "public enemy era"
between 1931 and 1935. It also spawned in much of the American public
strong habits of careful saving and frugality.
Great Depression has been the
subject of much literature over the years, as writers sought to evaluate
an era that caused so much emotional and financial trauma.
The most noteworthy novel of the time was The Grapes of Wrath by John
Steinbeck, published in 1939. Awarded both the Nobel Prize for literature
and the Pulitzer Prize, the novel focuses on a poor family of
sharecroppers who travel from
during the Dustbowl Days of the 1930s,
trying to find a better existence for themselves.
of America, updated August, 2016.
The Bum Blockade – Stopping the Invasion of
Dust Bowl Days or the "Dirty Thirties"
Hoovervilles of the Great Depression
Depression Gangsters &
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