10 Facts About the Great Depression
The Great Depression was a major economic depression that occurred during the 1930s. It was a worldwide event, although its exact timing and effects varied from country to country.
Below are ten facts about the Great Depression.
1. The trigger for the depression was the Wall Street stock market crash of 1929 in New York City. For the previous decade, known as "the Roaring Twenties," wealth rose rapidly in the US economy. However, widespread and reckless stock market investments had made stocks overpriced by 1929, and when the economy slowed, people suddenly panicked and sold off their shares. Millions of shares were traded in less than a week and many of them ended up being worthless.
“It came with a speed and ferocity that left men dazed. The bottom, simply fell out of the market..... The streets were crammed with a mixed crowd — agonized little speculators,... sold-out traders,... inquisitive individuals and tourists seeking ... a closer view of the national catastrophe..... Where was it going to end?”— Account of the stock market crash in the New York Times.
2. Republican Herbert Hoover was the U.S. president at the start of the depression. He had been voted in just six months before the crash on a wave of optimism. As the economic downturn became severe, however, Hoover's name began to be used in a derogatory fashion. The watery soup eaten by the unemployed was named "Hoover Stew," and the shantytowns constructed from cardboard and sheets were called "Hoovervilles."
3. The Great Depression peaked between 1932 and 1933 in the U.S. There were more bank runs in the U.S. in the spring and fall of 1931 and the fall of 1932. By the start of 1933 thousands of banks had closed, despite attempt by Hoover to prop up the ailing banks. 70,000 factories were closed by 1933, and the number of unemployed workers reached 12 million, 25% of the population.
4. The Great Depression caused social upheaval and political unrest across the world. The U.S. saw a number of Hunger Marches by poverty-stricken WW1 veterans on Washington D.C. Perhaps the most famous of which was the "Bonus Army" march in 1932, which set up a campsite on the other side of the Anacostia River from the federal heart of Washington. The protesters were eventually violently dispersed by the army and their tents burnt down.
“One woman said she borrowed 50 cents from a friend and bought stale bread for 3 cents per loaf, and that is all they had for 11 days except for one or two meals.... Another family did not have food for two days. Then the husband went out and gathered dandelions and the family lived on them.”— Report of an investigator in Philadelphia 1931
5. There is general agreement among economists that although the stock market crash was the trigger, the subsequent depression was mainly caused by the adoption of trade protectionist policies, and spread to some degree by the gold standard. The Hawley Smoot Tariff, for instance, was signed into law on June 17, 1930. The effect of the law was to raise U.S. tariffs (taxes) on over 20,000 imported goods to the highest levels in US history. The new law seriously backfired, however, as European countries retaliated with taxes on American goods making them too expensive to buy in Europe, contributing further to the economic crisis.
A large drop of sun lingered on the horizon and then dripped over and was gone, and the sky was brilliant over the spot where it had gone, and a torn cloud, like a bloody rag, hung over the spot of its going. And dusk crept over the sky from the eastern horizon, and darkness crept over the land from the east.— John Steinbeck, The Grapes of Wrath
6. Farmers living in the Canadian American prairies were already struggling in the 1920s but things got much worse in the 1930s, thanks to the Dust Bowl, a period of severe dust storms and ecological disaster. This was further exasperated by the Great Depression. The plight of the farmers was immortalized in print by the writer, John Steinbeck, and in song by the folk singer, Woody Guthrie.
7. The combination of economic hardship and (up until 1933) prohibition led to a crime boom in the U.S.A. Crime became a way of life for many as it was almost impossible to find employment and there was no effective welfare system.
There'd never been a more advantageous time to be a criminal in America than during the 13 years of Prohibition. At a stroke, the American government closed down the fifth largest industry in the United States - alcohol production - and just handed it to criminals - a pretty remarkable thing to do.— Bill Bryson
8. In 1932 Democrat Franklin D. Roosevelt was elected president in America, he immediately took action to try and stabilize industrial and agricultural production, create jobs and stimulate recovery. He also introduced legislation to regulate the stock market and prevent another crash. Large scale public work and infrastructure projects were also set in place, such as the building of dams and hydroelectric projects to control flooding and provide electric power.
9. Although the Great Depression began in the USA, many countries around the world were affected by the subsequent economic decline. These included Australia, Canada, Chile, Greece, New Zealand, South Africa, and the United Kingdom. Germany and Italy were hit especially hard. In Germany the economic chaos caused social and political breakdown and played a part in bringing Hitler's Nazi Party to power.
10. Historians generally agree that the Great Depression effectively ended with the advent of World War II, as rearmament policies and the mobilization of manpower cut unemployment. After the US entered the war in 1941, for instance, unemployment quickly fell below 10%.
If you had asked people in 1929, 'Here is what is about to happen. How much would you pay to avoid the Great Depression from occurring?' The answer is they would have paid a lot. They would have borrowed money if it could be used to prevent the Great Depression.— Austan Goolsbee
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© 2017 Paul Goodman