The Great Depression - facts and perspectives

The Great Depression

In many ways, the situation that we’re facing today mirrors that of the Great Depression.

Timeline Of The Great Depression
Many people attribute the start of the Great Depression to October 29, 1929, the day of the stock market crash known as Black Tuesday, but by many accounts, the country had gone into an economic downturn starting six months earlier.

The U.S. economic crisis soon turned into a world economic crisis, and stocks continued to fall. In late 1932, they reached their lowest point (20% of their October 1929 value). It took 27 years for the stock market to reach its pre-crash level.

By 1933, 11,000 of the nation’s 25,000 banks had failed, and unemployment had risen to almost 25% of the workforce. Democrat President Franklin D. Roosevelt took office in March 1933 and began economic stimulus programs, primarily based around massive public works projects. America didn’t completely recover from the Great Depression until it entered World War II in 1941.

Causes Of The Great Depression
Many factors contributed to the Great Depression, most notably:
Leverage – People were buying stocks on margin (for example, paying 10% and getting 100% worth of stocks), leading to falsely inflated value in many companies.
Run On Banks – Once people began to panic and went into banks to withdraw their money, the banks began to fail, causing more panic, which led to more bank failures, which led to more panic.
Less Spending – As more American’s lost their jobs, savings, and investments, they stopped spending money, which led to a deeper rates of unemployment.
Dust Bowl – From 1930 to 1936, America’s farmers struggled with a severe drought and poor farming conditions brought on by years of over-farming without proper crop rotation. The soil turned to dust and blew around in large dark clouds. This natural disaster added to the economic crisis in the Great Depression. The Dust Bowl affected more than a million acres, primarily in Oklahoma, Texas, Colorado, Kansas, Nebraska, and New Mexico, putting tens of thousands of farmers in peril.

Unemployment During The Great Depression
At the worst point in the Great Depression, in 1933, almost 25% of the workforce was unemployed. By 1939, thanks to Roosevelt’s New Deal programs, that rate had fallen to 15%. Only after America joined World War II did the unemployment figures drop rapidly as American factories geared up to make armaments and munitions.

The Great Depression Causes And Effects

The Great Depression represents one of the darkest periods in American economic history. Most people think the Great Depression started in October 1929, with the famous Black Tuesday stock market crash, but economists and historians point to an economic downturn which took hold in early 1929. The stock market crash led to unprecedented runs on banks, and by 1933, more than 11,000 of the nation’s 25,000 banks had failed.

Franklin D. Roosevelt’s New Deal is largely credited with bringing America out of the Great Depression by providing jobs and relief, but in truth, the country didn’t fully recover until 1941, when munitions and ammunition factories geared up for World War II.

That means the Great Depression timeline spanned approximately twelve years, with unemployment reaching its highest point in 1933, when 25% of American workers were idle.

From 1930-1936, American farmers struggled with conditions of the Dust Bowl, a drought that affected more than a million acres of farmland, and the result was mass migrations of people from rural lands to urban areas.

As we face tough economic times today and economic stimulus packages are being introduced right and left, it’s interesting to look at then and now Great Depression comparisons. Note: this hyerlink takes you to the source of information for this particular post. The site's title is : Great Depression - what happened and how it compares to today. Always be alert to historical "rewrites."

Great Depression Facts

1. -Many of the nation’s parks, highways, and bridges were built during the Great Depression, projects designed and overseen by the WPA as part of Roosevelt’s New Deal to put Americans to work.
2. -Social Security, a program that continues to this day, was introduced by Franklin D. Roosevelt in the midst of the Great Depression.
3. -The “Roaring Twenties” weren’t roaring for everyone. By 1929, 1% of Americans controlled 40% of the wealth in this country.
4. - The Federal Deposit Insurance Corporation (FDIC) was formed in 1934 to insure deposits in banks and restore customers’ faith in the American banking system.
5. -The Dust Bowl years spanned 1930-1936, when a million acres of farmland across the Plains became worthless due to severe drought and overfarming.
6. -After the stock market crash in 1929, it took 27 years to reach pre-crash levels.
   
7. -In 1939, the unemployment rate in America had dropped from a high of 25% to 15%, largely due to the New Deal programs introduced by Franklin D. Roosevelt.
   
8. -Tuesday, October 29, 1929 is known as Black Tuesday because of the plunge the stock market took, and it largely symbolizes the start of the Great Depression, though the economy had been in decline for at least six months prior to that date.
   
9. -By 1933, more than 11,000 of the nation’s 25,000 American banks had shuttered, victims of the Great Depression.
   
10. -Hoovervilles were the catchphrase for the shantytowns that cropped up across the United States, as homeless Americans improvised with scraps, abandoned cars, and packing crates.
    
11. -At its highest point during the Great Depression, unemployment reached 25% (in 1933).
    
12. -The Great Depression began in 1929 and ended in 1941 when America prepared to enter World War II.