The Great Depression

The Great Depression (1929-39) was the deepest and longest-lasting economic downturn in the history of the Western industrialized world. In the United States, the Great Depression began soon after the stock market crash of October 1929, which sent Wall Street into a panic and wiped out millions of investors. Over the next several years, consumer spending and investment dropped, causing steep declines in industrial output and rising levels of unemployment as failing companies laid off workers. By 1933, when the Great Depression reached its nadir, some 13 to 15 million Americans were unemployed and nearly half of the country's banks had failed. Though the relief and reform measures put into place by President Franklin D. Roosevelt helped lessen the worst effects of the Great Depression in the 1930s, the economy would not fully turn around until after 1939, when World War II kicked American industry into high gear.

Historical Importance of the Great Depression:

The Great Depression, an immense tragedy that placed millions of Americans out of work, was the beginning of government involvement in the economy and in society as a whole. Dates: 1929 -early 1940s

Overview of the Great 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 crashed and 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. Seeing a few banks close caused another panic across the country. Afraid they would lose their own savings, people rushed to banks that were still open to withdraw their money. This massive withdrawal of cash caused additional banks to close. Since there was no way

for a bank's clients to recover any of their savings once the bank had closed, those who didn't reach the bank in time also became bankrupt. Businesses and industry were also affected. Having lost much of their own capital in either the Stock Market Crash or the bank closures, many businesses started cutting back their workers' hours or wages. In turn, consumers began to curb their spending, refraining from purchasing such things as luxury goods. This lack of consumer spending caused additional businesses to cut back wages or, more drastically, to lay off some of their workers. Some businesses couldn't stay open even with these cuts and soon closed their doors, leaving all their workers unemployed. The Dust Bowl: In previous depressions, farmers were usually safe from the severe effects of a depression because they could at least feed themselves. Unfortunately, during the Great Depression, the Great Plains were hit hard with both a drought and horrendous dust storms. Years and years of overgrazing combined with the effects of a drought caused the grass to disappear. With just topsoil exposed, high winds picked up the loose dirt and whirled it for miles. The dust storms destroyed everything in their paths, leaving farmers without their crops. Small farmers were hit especially hard. Even before the dust storms hit, the invention of the tractor drastically cut the need for manpower on farms. These small farmers were usually already in debt, borrowing money for seed and paying it back when their crops came in. When the dust storms damaged the crops, not only could the small farmer not feed himself and his family, he could not pay back his debt. Banks would then foreclose on the small farms and the farmer's family would be both homeless and unemployed. Riding the Rails :During the Great Depression, millions of people were out of work across the United States. Unable to find another job locally, many unemployed people hit the road, traveling from place to place, hoping to find some work. A few of these people had cars, but most hitchhiked or "rode the rails." A large portion of the people who rode the rails were teenagers, but there were also older men, women, and entire families who traveled in this manner. They would board freight trains and crisscross the country, hoping to find a job in one of the towns along the way. When there was a job opening, there were often literally a thousand people applying for the same job. Those who weren't lucky enough to get the job would perhaps stay in a shantytown (known as "Hoovervilles") outside of town. Housing in the shantytown was built out of any

material that could be found freely, like driftwood, cardboard, or even newspapers. The farmers who had lost their homes and land usually headed west to California, where they heard rumors of agricultural jobs. Unfortunately, although there was some seasonal work, the conditions for these families were transient and hostile. Since many of these farmers came from Oklahoma and Arkansas, they were called the derogatory names of "Okies" and "Arkies." (The stories of these migrants to California were immortalized in the fictional book, The Grapes of Wrath by John Steinbeck.) 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. Roosevelt won 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). 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.

Some Interesting Facts About the Great Depression

1. Herbert Hoover (1874-1964), a Republican, was president when the Great Depression

began. He infamously declared in March 1930 that the U.S. had passed the worst and argued that the economy would sort itself out. The worst, however, had just begun and would last until the outbreak of WWII (1939).f
2. People who lost their homes often lived in what were called Hoovervilles, or shanty

towns, that were named after President Herbert Hoover. There was also Hoover Stew (food dished out in soup kitchens), Hoover Blankets, Hoover Hogs (jack rabbits used as food), and Hoover Wagons. 3. The Wall Street Crash of 1929 was one of the main causes of the Great Depression. Black Thursday, Black Monday, and Black Tuesday are all correct terms to describe the Crash because the initial crash occurred over several days, with Tuesday being the most devastating. 4. On Black Tuesday, October 29, 1929, the market lost $14 billion, making the loss for that week an astounding $30 billion. This was ten times more than the annual federal budget and far more than the U.S. had spent in WWI. Thirty billion dollars would be equivalent to $377,587,032,770.41 today. 5. The Dow Jones market peaked at 381 on September 3, 1929, and bottomed out at 42 in 1932, which is an amazing 89% decline. It did not reach 381 again until 23 years later in 1955 (that doesnt include inflation losses). 6.Causes of the Great Depression are widely debated but typically include a weak banking system, overproduction, bursting credit bubble, the fact that farmers and industrial workers had not shared in the prosperity of the 1920s, and a government-held laissez faire policy.

Top 5 Causes of the Great Depression

The effects of the Great Depression was huge across the world. Not only did it lead to the New Deal in America but more significantly, it was a direct cause of the rise of extremism in Germany leading to World War II. 1. Stock Market Crash of 1929:Many believe erroneously that the stock market crash that occurred on Black Tuesday, October 29, 1929 is one and the same with the Great Depression. In fact, it was one of the major causes that led to the Great Depression. Two months after the original crash in October, stockholders had lost more than $40 billion dollars. Even though the stock market began to regain some of its losses, by the end of 1930, it just was not enough and America truly entered what is called the Great Depression. 2. Bank Failures: Throughout the 1930s over 9,000 banks failed. Bank deposits were uninsured and thus as banks failed people simply lost their savings. Surviving banks, unsure of the economic situation and concerned for their own survival, stopped being as willing to create new loans. This exacerbated the situation leading to less and less expenditures. 3. Reduction in Purchasing Across the Board: With the stock market crash and the fears of further economic woes, individuals from all classes stopped purchasing items. This then led to a reduction in the number of items produced and thus a reduction in the workforce. As people lost their jobs, they were unable to keep up with paying for items they had bought through installment plans and their items were repossessed. More and more inventory began to accumulate. The unemployment rate rose above 25% which meant, of course, even less spending to help alleviate the economic situation. 4. American Economic Policy with Europe: As businesses began failing, the government created the Smoot-Hawley Tariff in 1930 to help protect American companies. This charged a high tax for imports thereby leading to less trade between America and foreign countries along with some economic retaliation. 5. Drought Conditions: While not a direct cause of the Great Depression, the drought that occurred in the Mississippi Valley in 1930 was of such proportions that many could not even pay their taxes or other debts and had to sell their farms for no profit to themselves. The area was nicknamed "The Dust Bowl." This was the topic of John Steinbeck's The Grapes of What

Effects Of The Great Depression

Stock Market And Banking Regulations :After the stock market crash of 1929 and the collapse of more than 40% of American banks by 1933, strict trading and banking regulations were put in place, as well as financial protections, enforced by the newly formed Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC). Franklin D. Roosevelts New Deal An Effect Of Great Depression: Franklin D. Roosevelt introduced programs between 1933 and 1938, designed to help America pull out of the Great Depression by addressing high rates of unemployment and poverty. An array of services, regulations, and subsidies were introduced by FDR and Congress, including widespread work creation programs. The cornerstones of the New Deal were the Public Works Administration and the National Recovery Administration. Expanded Role Of Government An Effect Of The Great Depression: FDRs New Deal increased the role of government in peoples lives to unprecedented levels, levels that continued long after America had recovered from the Great Depression. Mass Migration An Effect Of The Great Depression: When the Dust Bowl conditions in the 1930s led to farmers abandoning their fields, mass migration patterns emerged during the Great Depression, with populations shifting from rural areas to urban centers. Societal Change An Effect Of The Great Depression: Many people who survived the Great Depression would remain frugal throughout the rest of their lives, wary of banks, apt to hoard food, and suspicious of the stock market.

Reference:
1. http://www.history.com/topics/great-depression 2. http://history1900s.about.com/od/1930s/p/greatdepression.htm 3. http://facts.randomhistory.com/2009/04/12_great-depression.html 4. http://americanhistory.about.com/od/greatdepression/tp/greatdepression.htm 5. http://www.thegreatdepressioncauses.com/effects.html