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The Great Depression

Updated on May 16, 2013

After World War I, in the 1920s the United States entered a period of great prosperity. During this decade the American people became very optimistic. This trust in the future was suddenly shattered one day, when the Great Depression era started, ruining the lives of ten-thousands and changing optimistic thinking into pessimistic.

The crash of the NYSE impacted the lives of so many people so much because of the credit system of the commercial banks of the time. Banks and credit companies gave credit to basically everyone who had money. Credit accommodation was not decided on risks. If someone wanted to borrow money to trade at the exchanges, both the Chicago Commodity and the New York stock exchanges. After the Crash, as mentioned before, a widespread panic broke out, causing more and more people to run to the nearby bank houses to withdraw their savings from it. This caused banks to run out of cash, so bank houses closed one after another. Some 1350 closed in 1930 and 2300 more failed in the year 1931.

The sufferings were great. Those who could not pay their rent fees or mortgage payments had their homes taken. If farmers could not pay back the loans they had, which most often was the case, banks took their farms, and bid them off. Long queues were formed in front of bakeries to buy day-old bread. This long row of people waiting was later named the “bread lines”, and gradually became the symbol of the Depression.

The Depression started by the New York Stock Exchange’s crash. On October 24, 1929, commonly called the “Black Thursday” occurred. On this day the highly overvalued stock prices started to tumble due to a couple of sellings. This tumbling started a panic and it increased and increased causing prices to drop a lot. “In one day, investors saw the profits of several years vanish.”(The Story of The Great Depression, p.9). This caused people not to invest in the stock markets as much causing very little circulation during the decade lasting Depression.

Owners of factories and different companies, since they lost their invested money in the stock markets started to dismiss more and more of their workers causing the already severe recession to turn into a depression. Since the unemployed didn’t have money, they couldn’t afford to buy goods causing more and more shops to close, deepening the Depression even more. Unemployment caused more unemployment. “In 1925 only about 3 percent of the country’s workers were unemployed. In 1930, that figure jumped to 9 percent, and by late 1932, 25 percent [or a quarter] of the work force had no jobs. Some thirteen million people were faced with the terrifying problem of how to feed their families with no paychecks coming in.”(The Story of The Great Depression, p 10-11).

The Economy During the Great Depression

US Gross Domestic Product (current dollars)

The Great Crash, 1929-1933

in 1929: $103.6 billion
in 1930: $91.2
in 1931: $76.5
in 1932: $58.7
in 1933: $56.4

New Deal Recovery and Recession, 1934-39

in 1934: $66.0 billion
in 1935: $73.3
in 1936: $83.8
in 1937: $91.9
in 1938: $86.1
in 1939: $92.2

Mobilization for WWII, 1940-1945

in 1940: $101.4 billion
in 1941: $126.7
in 1942: $161.9
in 1943: $198.6
in 1944: $219.8
in 1945: $223.1

Growth of Government During the Great Depression

Government Expenditures and Investments (in current dollars)

Hoover Administration, 1929-1939

in 1929: $9.4 billion
in 1930: $10.0
in 1931: $9.9
in 1932: $8.7
Average government spending as percentage of GDP, 1929-32: 12.0%

Roosevelt's New Deal

in 1933: $8.7 billion
in 1934: $10.5
in 1935: $10.9
in 1936: $13.1
in 1937: $12.8
in 1938: $13.8
in 1939: $14.8
Average government spending as percentage of GDP, 1933-39: 15.4%

Mobilization for WWII

in 1940: $15.0 billion
in 1941: $26.5
in 1942: $62.7
in 1943: $94.8
in 1944: $105.3
in 1945: $93
Average government spending as percentage of GDP, 1940-45: 35.3%

Unemployment During the Great Depression

Average rate of unemployment

in 1929: 3.2%
in 1930: 8.9%
in 1931: 16.3%
in 1932: 24.1%
in 1933: 24.9%
in 1934: 21.7%
in 1935: 20.1%
in 1936: 16.9%
in 1937: 14.3%
in 1938: 19.0%
in 1939: 17.2%3

The Great Crash on Wall Street

Dow Jones Industrial Average

Peak in September 1929: 381.17
Trough in July 1932: 41.22

Political Participation During the Great Depression

Civilian Population of Voting Age

in 1932: 75.7 million
in 1934: 77.9 million
in 1936: 80.1 million
in 1938: 82.2 million

Percentage of Eligible Voters Who Cast Ballots in General Elections

in 1920: 43.5%
in 1924: 43.9%
in 1928: 51.9%
in 1932: 52.5%
in 1936: 57.0%
in 1940: 59.2%
in 1944: 52.9%

Estimated audience for Father Charles Coughlin's weekly radio program by the end of 1932: 30-45 million
Estimated number of Americans who signed Townsend Plan petitions by 1935: 25 Million
Estimated number of Americans subscribed to the mailing list of Huey Long's Share Our Wealth clubs by 1935: 7.5 million
Estimated membership of Communist Party USA in 1934: 30,000
Estimated membership of German-American Bund (Nazi sympathizers) in 1938: 25,000

Entertainment During the Great Depression

Average Weekly Movie Attendance

in 1927: 57 million
in 1930: 90 million
in 1931: 80 million
in 1932: 60 million
in 1933: 50 million

Family Life in the Great Depression

Fertility Rates (per 100,000 women aged 15-44)

in 1928: 93.8
in 1929: 89.3
in 1930: 89.2
in 1931: 84.6
in 1932: 81.7
in 1933: 76.3
in 1934: 78.5
in 1935: 77.2
in 1936: 75.8
in 1937: 77.1
in 1938: 79.1
in 1939: 77.6
in 1940: 79.9
in 1941: 83.4
in 1942: 91.5
in 1943: 94.3
in 1944: 88.8
in 1945: 85.9

Average divorce rate, (per 1,000 people)

1920-1929: 1.6
1930-33: 1.4
1934-39: 1.8
1940-46: 2.8
1947-64: 2.5

Average rate of death by suicide (per 100,000 population)

1920-1928: 12.1
1929: 18.1
1930-1940: 15.4

source: http://www.shmoop.com/did-you-know/history/us/the-great-depression/statistics.html

Americans hoped that the government would do something about the Depression. At this time a Republican, Herbert Hoover was the president. He believed that the economy would finally correct itself, and the only thing it needed was confidence. He tried to promote optimism by talking about it and by keep on saying that the worst was already over. Hoover did do some things, although not much. He founded organizations and passed acts such as the Emergency Relief and Construction Act (ERC), the Reconstruction Finance Corporation (RFC), the American Federation of Labor (AFL), the American Farm Bureau Federation (AFBF), the President’s Emergency Committee for Employment (PECE), the President’s Organization for Unemployment (POUR), and the National Credit Corporation (NCC). Even though Hoover founded or approved founding these acts, corporations, federations, committees, and organizations, and although there were a lot of them, since Hoover was a conservative, they weren’t very strong and did not accomplish much.

While Hoover held tightly onto his noninterventionist philosophy, the bread lines grew and grew. Americans started to blame him for all the problems that entered their lives since the Depression started. Anger towards the president is demonstrated clearly by calling clusters of shacks set up this time by the homeless people “Hoovervilles”. ”The newspapers that the poor covered themselves with at night were named ‘Hoover blankets’. The wild jackrabbits that people in the West were forced to eat were known as ‘Hoover hogs’.”(The Story of the Great Depression p.14).

The farmers on the Great Plains were affected by the Depression even more than the industrial workers in the cities and towns. The natural grasses had been plowed up almost completely during the last couple of decades so that wheat could be planted. Since wheat is unable to hold down the soft topsoil, so winds picked them up and blew them away, making the once rich farmlands into barren deserts. Some 50 million acres-an area that stretched from Texas to North Dakota- was called the “Dust Bowl”. Thus more and more farmers migrated west to California, but a lot of them could not receive any jobs there. This made farmers very desperate. Some even believed that they were so desperate that the country was ripe for a violent revolution.

Then the election of 1932 came. Chances for Hoover to be reelected were very dim. In fact people voted for a devout Democrat of a very rich family, who would later be seen by many historians as the “savior of American capitalism”. His name was Franklin Delano Roosevelt. On the day he took office, he told to his audience in his speech to the crowd that gathered in front of him, “First of all, let me assert my firm belief that the only thing we have to fear is fear itself.”

Many of his close friends urged and advised him to retire from politics. Fortunately he didn’t listen to them and did not quit. Later he became the governor of New York and then on the very first day of his presidency he faced a serious bank crisis. On that day thousands of people in panic rushed to the close by bank house to withdraw their savings in fear that the banks would close and thus they would loose all their money deposited. Roosevelt put an end to this by closing all the banks and declaring a “bank holiday”, as many people called it. He then asked Congress to pass an emergency act that would allow government inspectors to examine all the records of the banks so that they could decide which was safe enough and in case it was that they could reopen them. Congress after some hesitation accepted the idea and passed the particular emergency act.

In contrast with Hoover, Roosevelt was a man of big actions. He had a plan to deal with the Depression. This world famous plan was, as he called it the “New Deal”. It created dozens of government agencies and set into motion vast projects that were designed to stimulate the economy and create hundreds of thousands of jobs. Many New Deal laws were passed during Roosevelt’s first one hundred days in office. They were probably the most dramatic first one hundred days of any president since the time of Abraham Lincoln during the beginning of the Civil War.

There were many very popular programs of the New Deal. One such program was the Civilian Conservation Corps (CCC). It took the needy and often young man off the city streets and put them to work in forests and national parks. There they carved out roads and hiking trails, cleaned beaches, and cleared camping areas. Also they planted some 200 million trees from Texas to all the way to the Dakotas, which ended the Dust Bowl.

The Works Progress Administration (WPA) created jobs of building waterpower plants on the Mississippi, schools, hospitals, flood control and such for about two million jobless. It also supported culture by hiring artists, actors, and actresses.

Franklin Roosevelt also tried to bring hope to Americans through the power of his personality. There were no home TVs in the 1930s, but most families had radios. Roosevelt regularly addressed the public in a series of radio talks called “fireside chats”. In as informal manner, the president explained what progress his administration was making to fight the depression. He was the first president to take full advantage to radio’s ability to reach Americans at home.

The Tennessee Valley Authority (TVA) launched ambitious construction project designed to harness the Tennessee River and provide electrical power to much of the rural South. When even though it had many powerful opponents, the series of dams and power plants gave new life to what was once one of the most depressed areas in the nation.

Roosevelt’s wife, Eleanor, was the most active first lady the country had ever known. She always visited hospitals and schools being built by New Deal funds. She had a special sympathy for blacks, most of who suffered severely because of the depression. 

The Great Depression had many positive effects. It showed that that stock markets, banks and other branches of the economy needed serious regulations by the government. It also thought the common people to be more careful with their money and not to take to much credit just little ones, so that they would be able to repay those loans.

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