The Depression that wasn't so Great
By: Maya Cunningham; Ethelyn Willis; Timothy Riley
THE GREAT DEPRESSION BEGINS: THE STOCK MARKET CRASH OF 1929
The American economy entered an ordinary recession during the summer of 1929, as consumer spending dropped and unsold goods began to pile up, slowing production. At the same time, stock prices continued to rise, and by the fall of that year had reached levels that could not be justified by anticipated future earnings. On October 24, 1929, the stock market bubble finally burst, as investors began dumping shares en masse. A record 12.9 million shares were traded that day, known as “Black Thursday.” Five days later, on “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 construction 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 adherence to the gold standard, which joined countries around the world in a fixed currency exchange, helped spread the Depression from the United States throughout the world, especially in Europe.
A Worldwide Depression
A worldwide depression struck countries with market economies at the end of the 1920s. Although the Great Depression was relatively mild in some countries, it was severe in others, particularly in the United States, where, at its nadir in 1933, 25 percent of all workers and 37 percent of all nonfarm workers were completely out of work. Some people starved; many others lost their farms and homes. Homeless vagabonds sneaked aboard the freight trains that crossed the nation. Dispossessed cotton farmers, the “Okies,” stuffed their possessions into dilapidated Model Ts and migrated to California in the false hope that the posters about plentiful jobs were true. Although the U.S. economy began to recover in the second quarter of 1933, the recovery largely stalled for most of 1934 and 1935. A more vigorous recovery commenced in late 1935 and continued into 1937, when a new depression occurred. The American economy had yet to fully recover from the Great Depression when the United States was drawn into World War II in December 1941. Because of this agonizingly slow recovery, the entire decade of the 1930s in the United States is often referred to as the Great Depression.
The Great Depression is often called a “defining moment” in the twentieth-century history of the United States. Its most lasting effect was a transformation of the role of the federal government in the economy. The long contraction and painfully slow recovery led many in the American populationto accept and even call for a vastly expanded role for government, though most businesses resented the growing federal control of their activities. The federal government took over responsibility for the elderly population with the creation of Social Security and gave the involuntarily unemployed unemployment compensation. The Wagner Act dramatically changed labor negotiations between employers and employees by promoting unions and acting as an arbiter to ensure “fair” labor contract negotiations. All of this required an increase in the size of the federal government. During the 1920s, there were, on average, about 553,000 paid civilian employees of the federal government. By 1939 there were 953,891 paid civilian employees, and there were 1,042,420 in 1940. In 1928 and 1929, federal receipts on the administrative budget (the administrative budget excludes any amounts received for or spent from trust funds and any amounts borrowed or used to pay down the debt) averaged 3.80 percent of GNP while expenditures averaged 3.04 percent of GNP. In 1939, federal receipts were 5.50 percent of GNP, while federal expenditures had tripled to 9.77 percent of GNP. These figures provide an indication of the vast expansion of the federal government’s role during the depressed 1930s.
Summary of the Depression
The Stock Market Crash
After nearly a decade of optimism and prosperity, the United States was thrown into despair on Black Tuesday, October 29, 1929, the day the stock market crashedand the official beginning of the Great Depression. As stock prices plummeted with no hope of recovery, panic struck. Masses and masses of people tried to sell their stock, but no one was buying. The stock market, which had appeared to be the surest way to become rich, quickly became the path to bankruptcy.
And yet, the Stock Market Crash was just the beginning. Since many banks had also invested large portions of their clients' savings in the stock market, these banks were forced to close when the stock market crashed.
Roosevelt and the New Deal
The U.S. economy broke down and entered the Great Depression during the presidency of Herbert Hoover. Although President Hoover repeatedly spoke of optimism, the people blamed him for the Great Depression. Just as the shantytowns were named Hoovervilles after him, newspapers became known as "Hoover blankets," pockets of pants turned inside out (to show they were empty) were called "Hoover flags," and broken-down cars pulled by horses were known as "Hoover wagons."
During the 1932 presidential election, Hoover did not stand a chance at reelection and Franklin D. Rooseveltwon in a landslide. People of the United States had high hopes that President Roosevelt would be able to solve all their woes. As soon as Roosevelt took office, he closed all the banks and only let them reopen once they were stabilized. Next, Roosevelt began to establish programs that became known as the New Deal.
These New Deal programs were most commonly known by their initials, which reminded some people of alphabet soup. Some of these programs were aimed at helping farmers, like the AAA (Agricultural Adjustment Administration). While other programs, such as the CCC (Civilian Conservation Corps) and the WPA (Works Progress Administration), attempted to help curb unemployment by hiring people for various projects.
The End of the Great Depression
To many at the time, President Roosevelt was a hero. They believed that he cared deeply for the common man and that he was doing his best to end the Great Depression. Looking back, however, it is uncertain as to how much Roosevelt's New Deal programs helped to end the Great Depression. By all accounts, the New Deal programs eased the hardships of the Great Depression; however, the U.S. economy was still extremely bad by the end of the 1930s.
The major turn-around for the U.S. economy occurred after the bombing of Pearl Harbor and the entrance of the United States into World War II. Once the U.S. was involved in the war, both people and industry became essential to the war effort. Weapons, artillery, ships, and airplanes were needed quickly. Men were trained to become soldiers and the women were kept on the homefront to keep the factories going. Food needed to be grown for both the homefront and to send overseas.
It was ultimately the entrance of the U.S. into World War II that ended the Great Depression in the United States.
The Depression Facts
The economic crisis of the 1930s is one of the most studied periods of American history, and facts about the Great Depression are interesting to read. Scholars have studied the economic calamity from all angles and amassed an immense collection offacts about the depression. Some products and sayings we still use today have their roots in the Great Depression.
Here are some interesting facts about the Great Depression.
General Great Depression Information
* The Great Depression peaked between 1932 and 1933.
* Some 6,000 street vendors walked the streets of New York City in 1930 trying to sell apples for 5 cents each.
* President Herbert Hoover's name became synonymous with the hardships faced by many. Soup was called "Hoover Stew," and shantytowns made of cardboard and sheets were called "Hoovervilles."
* Zippers became widely used because buttons became too expensive.
* Because the circulation of money was so low, the U.S. didn't mint nickels in 1932 or 1933.
* The biggest hit song of 1932 was "Brother, Can You Spare a Dime?" by Bing Crosby.
* Thousands of homeless families camped out on the Great Lawn at Central Park in New York City, which was an empty reservoir during the Great Depression.
* By 1940, 2.5 million people had fled the Great Plains. Roughly 200,000 moved to California.
* The term "skid row" came about during the depression years. Skid row-a run-down part of a town frequented by vagrants, alcoholics, and drug addicts.
a desperately unfortunate or difficult situation.
* One of the largest Hoovervilles in the nation was built in 1930 in St. Louis. It had its own mayor, churches and social institutions. The shantytown was funded by private donors and existed until 1936.
* Comic strips like Superman, Flash Gordon and Dick Tracy kept children entertained during the Great Depression.
* John Steinbeck wrote "The Grapes of Wrath" and "Of Mice and Men" about the lives of these people and the devastating effects of the Dust Bowl.
Financial Great Depression Facts
* In the 1920s, the wealthiest one percent owned more than a third of American assets.
* When stock speculator was a prominent practice, banks lent money to investors to buy stock. Nearly $4.00 out of every $10.00 borrowed from the banks was used to buy stock
* The average income of the American family dropped by 40 percent from 1929 to 1932. Income fell from $2,300 to $1,500 per year.
* During the 1930s, manufacturing employees earned about $17 per week. Doctors earned $61 per week.
* The stock market didn't return to pre-depression levels until 1954.
Information about Roosevelt and the New Deal
* Roosevelt blamed "unscrupulous money lenders" and a "generation of self-seekers" for the Great Depression.
* Forty-three "alphabet agencies" were created during the New Deal.
* The Empire State building, the Chrysler building, the Golden Gate Bridge and Rockefeller Center were all built as part of depression-era worker relief programs.
* Six of eight major New Deal initiatives were found to be unconstitutional by the U.S. Supreme Court.
* Three towns were created from scratch during the New Deal. Greendale, Wisconsin, Greenhills, Ohio and Greenbelt, Maryland were created during work relief programs. All the towns still exist today.
A Short History of the Great Depression
By Nick Taylor, the author of “American-Made” (2008), a history of the Works Progress Administration.
The Great Depression was a worldwide economic crisis that in the United States was marked by widespread unemployment, near halts in industrial production and construction, and an 89 percent decline in stock prices. It was preceded by the so-called New Era, a time of low unemployment when general prosperity masked vast disparities in income.
The start of the Depression is usually pegged to the stock market crash of “Black Tuesday,” Oct. 29, 1929, when the Dow Jones Industrial Average fell almost 23 percent and the market lost between $8 billion and $9 billion in value. But it was just one in a series of losses during a time of extreme market volatility that exposed those who had bought stocks “on margin” — with borrowed money.
The stock market continued to decline despite brief rallies. Unemployment rose and wages fell for those who continued to work. The use of credit for the purchase of homes, cars, furniture and household appliances resulted in foreclosures and repossessions. As consumers lost buying power industrial production fell, businesses failed, and more workers lost their jobs. Farmers were caught in a depression of their own that had extended through much of the 1920s. This was caused by the collapse of food prices with the loss of export markets after World War I and years of drought that were marked by huge dust storms that blackened skies at noon and scoured the land of topsoil. As city dwellers lost their homes, farmers also lost their land and equipment to foreclosure.
The Great Depression was a time of desperation for many families to survive. From the stock market crash in 1929 until 1940, jobs were limited and people had little resources, not to mention little hope, for the future. Many people use general statements to describe this economic trench. They learned about the average difficulties people went through. However, are people actually learning about the different hardships US citizens in different economic classes experienced during the Great Depression? When learning about this low point of US history, the highlights seem to focus on the broad hardships that were experienced. Were these only the difficulties that applied to the middle class of America or did everyone involved experience the same thing? To better portray and relate this information, people must see and comprehend these difficulties through the point of view that not widely known. Teenagers and children, the generation being raised during this time, could do nothing to better their situation. They were at the mercy of how their parents handled the crisis and their job situation. So what is it like for children during this time? Did they understand what was going on or did they just accept the hardships as the norm? You will be exploring this perspective throughout this site and activities included in it. In the end, you should be able to explain how the youth of the Great Depression survived this time through the use of photos, youthful accounts of this time, and editorial cartoons to make a lasting impression that shows how children and teenagers endured the Great Depression.
Our Opinions of the Great Depression