Poverty in Alabama


Alabama, one of the Southern States of the United States, is known as the Heart of Dixie. Alabama occupies a central place in the history of the South. The Constitution of the Confederacy was drawn up in Montgomery, the state capital, in 1861. The Alabama Capitol served as the first Confederate Capitol. There, Jefferson Davis took office as president of the Confederacy.

How the great depression started

In 1929 the standard economic theory suggested that a calamity such as the Great Depression could not happen: the economy possessed equilibrating mechanisms that would quickly move it toward full employment. For example, high levels of unemployment should put downward pressure on wages, thereby encouraging firms to increase employment. Before the Great Depression, most economists urged governments to concentrate on maintaining a balanced budget. Since tax receipts inevitably fell during a downturn, governments often increased tax rates and reduced spending. By taking money out of the economy, such policies tended to accelerate the downturn, though the effect was likely small.