The Great Depression was one of the darkest periods in American history. Although it began in the United States, almost all countries around the world felt its depressing impact.
Unemployment, a decline in production, deflation, homelessness, and hunger were part of reality at the time. It was the crash that taught economic lessons to everyone, starting from rich traders to ordinary citizens.
Over nine decades passed since that event, but we are still remembering the period as a scar of the American economy.
Given its historical importance, I thought it will be appropriate to share some facts about the Great Depression.
It began on October 23, 1929.
The month was labeled as “Black October” because it started the Depression that lasted for a decade.
The market crashed on Thursday of October 24, 1929, creating a chaotic scene in Wall Street. Thousands of people gathered around the stock exchange building to see what was going on.
Overly optimistic investors panicked seeing a sudden 11% drop in Dow Jones Industrial index as they were used to seeing stocks only going up over the last several years.
So, the sell-off began uncontrollably in the New York Stock Exchange. On that day, there were only anxious sellers and almost no buyers.
The Great Depression had lasted for 10 years
The stock market crash of 1929 ignited the 10-year-long great depression in the United States. After the crash, banks failed one by one, creating a domino effect in the US market.
Some people lost all of their money. The worst part was that most of that money was borrowed from banks. So, people and businesses defaulted on their payments, leading banks to go bankrupt.
Consumer demand also fell sharply and companies went bankrupt being unable to find investors.
Having limited finances for operational needs, large-scale layoffs began. People lost their houses being unable to pay their mortgages. Those desperate situations lasted between 1929 and 1939.
The worst period of the Great Depression was between 1929 and 1933.
Although it took the United States almost 25 years to recover from the Depression, most acute depressions had happened between 1929 and 1933.
Therefore, the 1930s are generally considered the period of the Great Depression.
It was the period when people started understanding that prosperity can’t last forever and they needed to have emergency funds for the dark days like the ones they were experiencing at the moment.
Why did the Great Depression happen?
The stock market began to inflate to a phenomenal size, and no one controlled it, not even the government.
Plus, wealthy investors, insiders, and several predominant bankers manipulated the market to increase the value of stocks. Concisely, elites speculated with ordinary people’s money.
As a result, the stock prices swelled many times faster, creating a large bubble, which eventually burst.
Seeing the sudden decline in prices on the stock market, people panicked and began to sell their shares.
The wealth of the Americans got wiped out. Especially the ordinary people who bought stocks with borrowed money experienced greater financial depression.
Industrial production declined all over the world.
In the first three years (1929-1932), industrial production in the United States fell by 46%, in Germany by 41%, in France by 24%, and in Great Britain by 23%.
Unemployment was a new reality.
Unemployment has increased almost 6 times in the US, more than 3 times in France and Germany, and more than 2 times in the UK.
In percentage points, the US unemployment during the Great Depression was close to 25%, which translates to 15 million unemployed Americans.
Suicide mortality increased significantly
Unfortunately, some investors lost the entire money, that they had earned during their lifetime, in a single day. Some people went even deeper than that since their money was borrowed from banks.
People experienced severe forms of mental stress and depression. Some even could not handle their stress as they did not see a light on the other side of the tunnel. Thus, the Great Depression increased suicide mortality.
There are also claims that some investors jumped out of high-rise buildings after being wiped out by the stock market crash. However, according to a source, some of those claims are baseless myths.
Lives of ordinary people were tough.
Millions of people were plunged into horror and ruin, starvation, lack of money, homelessness. Their lives changed forever.
Homeless people created shacktowns called Hooverville in the areas closer to free soup kitchens.
It got such a name because Herbert Hoover was the president of the United States at the time.
Americans staged hunger marches across the country.
Most of the Americans did not understand what was happening. Because the 1920s were the booming times in the United States, called “Roaring Twenties”.
Right after World War I, American society experienced heydays.
The economy was booming creating growth in science, technology, trade, and other areas.
People were buying cars and new technologies such as radios. But all of a sudden, those heydays turned into dark days.
Ordinary people caught off guard and they were not prepared for the sudden downturn of the economy. So, they started demanding support from the government to ease their desperate situations.
The primary demands of the Hunger Marches were social and unemployment insurances to cover illnesses, maternal care, accidents, and old ages.
Additionally, the marchers requested free water, gas, and light from the government. As a result, the legislature passed a relief bill.
The Great Depression began under president Herbert Hoover.
Herbert Hoover, was the president during the onset of the Great Depression. Although he launched a massive Federal Public Works program to alleviate unemployment, he was mostly criticized for not preventing and handling the crisis.
In March 1930, Hoover declared that the worst was over and the economy was recovering, but this was only the beginning of the Great Depression, which lasted until the start of World War II.
Because of that, Hoover could not secure the second term of the presidency.
Some of the great American companies vanished during the Great Depression.
The decline of the US economy during the Great Depression was very deep. Some industries, especially the financial sector, were in a disastrous situation.
The game “Monopoly” appeared during this period.
The Monopoly was invented by Charles Darrow in 1935 and it became the popular game of the Great Depression.
Although Charles Darrow sold the idea to Parker Brothers naming it “Monopoly”, the idea of the game existed decades earlier.
Inventor, writer, artist, and feminist named Maggie Lizzie invented the original framework of the game in 1893 and got a patent for it. Parker Brothers paid Maggie $500 for her patent.
Maggie gladly accepted the offer hoping that the game would help people to understand the economic inequalities.
However, contrary to what Maggie hoped for, the game inspired players to become rich in the expenses of someone’s financial hardships.
African Americans suffered the most during the Great Depression.
They were the first to be laid off from their jobs and were the last to be hired. Also, since they were already working at the low-paying jobs, they did not have any savings to fall back to.
Unskilled labor jobs that they used to work were filled with unemployed white Americans.
According to one source, the African American unemployment rate reached a staggering 50% and even 70% in some areas.
By 1940, about 1.7 million African Americans moved from rural south to the urban north, looking for economic opportunities.
Also, the struggles of the great depression pushed blacks to get involved in political activism, the result of which led to the civil rights movement during the 1950s and 1960s.
American farms experienced hardships.
The Great Depression was not a good time for farming either. Of course, it is logical to assume that farms might have done better since they were the food producers at the time of poverty.
But it wasn’t the case. The consumer demand dropped radically, so did the prices of farm produces.
Farmers needed to work double hard to compensate for their losses. Some farms went bankrupt, being unable to pay their loans and to hire enough laborers.
Interestingly, some farmers burned corn in their stoves because corn was cheaper than coal at the time.
However, in general, farmers’ living conditions were much better than those living in urban areas. They could produce their own food, cultivating their gardens and raising chickens and cattle.
But still, they needed to pay their bank loans and taxes in cash, which complicates the situation.
Several great constructions were completed during the Great Depression.
Despite the economic hardships, the constructions needed to go on during the Depression, so unemployed people could find some type of job.
The construction of famous buildings such as the Golden Gate Bridge, the Empire state building, and the Hoover Dam was completed during the great depression.
These large-scale construction projects provided thousands of Americans with construction jobs.
Especially, President Hoover took the initiative to create job opportunities for unemployed Americans.
He pushed forward the Federal Public Works Program, which funded the construction of several public buildings, highways, river and harbor improvements in cooperation with states.
The Great Depression under Franklin Roosevelt.
In 1933, Franklin Delano Roosevelt succeeded Hoover as President. The first 100 days of his presidency were generally marked by active legislative activity.
His administration has passed a series of laws aimed at stabilizing industrial and agricultural production, creating jobs, and stimulating the recovery and reform of the financial system.
The primary weapon in the fight against the Great Depression was Roosevelt’s “New deal”.
It was aimed at creating new jobs and relief for those suffering from economic hardships.
More specifically, Franklin Roosevelt has passed the following laws trying to restore American prosperity:
– Emergency Banking Act to reorganize banking operations, to close the insufficient banks, and to restore the trust of American people toward banks.
– The Beer Wine Revenue Act to end prohibition and prohibition-related crimes, and to improve federal tax revenue. The year after the repeal of prohibition, the federal government collected $258 in alcohol taxes, which was equal to 9% of the government tax revenue. The funds helped to finance Roosevelt’s New Deal programs.
– Tennessee Valley Authority Act to give power to the federal government to build dams in the Tennessee river to generate cheap electricity for the region and protect the area from flooding.
– National Industrial Recovery Act – to give the right to American workers to create unions, so they could negotiate better wages and working conditions with their employers.
– Work Progress Administration (WPA) to provide jobs for unemployed Americans using federal money.
– National Labor Relations Act (Wagner Act) to protect the rights of workers and preserve fairness in work settings.
– Social Security Act to guarantee pensions for millions of Americans, help unemployed, and to provide assistance for children and the disabled.
The Great Depression recovery began in 1933.
The economy began to show the first signs of recovery in 1933 and gradually stabilized over the next three years.
However, in 1937, there was a new strong downturn, caused by tightening monetary policy and reducing government spending.
In 1939, still, one in five Americans were unemployed, which signaled that the government needed to do more to stabilize the economy.
According to some historians, World War II ended the Great Depression because 12 million Americans went to war and 17 million unemployed could find a job thanks to the massive defense spending.
Nevertheless, some economists believe that World War II did not end the Depression but postponed it. Because the US government traded the debt for unemployment during World War II.
The national debt grew $49 billion in 1941 up to $260 billion in 1945. That indicates that the war only postponed the troubles of the US economy.
The Great Depression had a viral impact on the economies of all countries.
In other words, depression affected almost all countries in the world. World trade declined by more than 50%.
World countries started getting out of the Gold Standard to normalize their economy. Sooner the countries get out the gold standard, the sooner they recovered from the Depression.
Getting out of the gold standard meant devaluing a national currency and injecting a large volume of cheap currency into an economy.
Plus, countries started imposing tariffs on imported goods to protect the interest of the local producers, businesses, and workers.
For example, the US introduced the Tariff Act of 1930, also known as the Smoot–Hawley Tariff Act.
The primary purpose of the Smooth-Hawley Tariff Act was to insert protectionist policies into the American market to encourage locals to buy American-made goods over imported goods.
When tariffs were imposed, the price of imported goods increased while the price of the locally produced goods remained the same, thus making the American goods much attractive to locals.
However, the tariffs hindered the world trade. Trade barriers started to pop up and the relationships between countries got tenser.
Adolf Hitler rose to power during the Great Depression.
The great crash of 1929 sent shockwaves across the world. All of the countries around the world felt its devastating impact one way or another. And, so did Germany.
As being the country highly dependent on foreign loans and trade, Germany experienced greater devastation.
In Germany, unemployment was on the rise, devalued national currency lost its buying power, production and exports dried up.
All those negative consequences of the Depression made the German people angry toward the ruling government.
Germans started looking at other parties such as Nazis and Communists to come out of the economic depression.
Hitler saw the time as an opportunity to influence the public through the Nazi party. He gave speeches to the masses by telling them what they wanted to hear.
And he promised great prosperity in the nearest future. Of course, none of that happened.
The film industry produced hundreds of movies and cartoons about the Great Depression.
I am sure that you have already watched some of them. Those movies portray the life of ordinary Americans during the Depression.
Although some scenes are fictional, those movies use historical evidence to transmit the feeling of the time.
Famous criminals such as Bonnie and Clyde also appeared during this period and robbed banks and smaller shops until they were killed during a shootout.