SUBSCRIPTION
The Great Depression Facts, Timeline, Causes, Pictures
April 25, 2011
The Great Depression in the United States began in 1929 and ended in 1941. It was the worst economic crisis in the history of the U.S. The whole world was negatively impacted by the Great Depression. Below you will see the great depression facts, causes and the great depression timeline.
Before The Great Depression
During the 1920’s, often called the Roaring Twenties, the U.S. economy had an unprecedented economic boom. Things such as electricity, radio, telephone and cars were being produced for the masses. There was mass production in the manufacturing, telecommunications, movie and chemical sectors. Infrastructure was being built to support all of these new technologies. Much of the population moved into the cities to acquire jobs in these industries. Americans found themselves with ever-increasing amounts of dollars to spend which was then invested in the stock market and deposited into banks. With the supply of money growing rapidly, banks were opening up at the rate of 4 – 5 per day.
What Caused The Great Depression?
The Great Depression happened due to a number of reasons. It was created by a combination of a stock market crash, bad banking structure and tight monetary policy. This is why it lasted so long.
The stock market peaked on September 3, 1929, with a record close of 381.17. Trading volume was 444k shares. By the end of the same month, the market had fallen by 10% to 343. On Monday, October 29, on 16.4% shares traded, the markets fell 11.5%. By that time, the markets closed at 230.17 down 40% from its all-time high. In that single day, investors lost 14 billion dollars and by the end of 1929, 40 billion dollars was lost. This crash put a lot of pressure on banks and caused a great deal of money to be taken out of the economy.
At that time, banks lent money to investors to buy stock. Nearly $4.00 out of every $10.00 that was borrowed from the banks was used to buy stock. Margin requirements were as low as 10% during the 1920’s. Banks were allowed to speculate and buy stocks for themselves. Because the capital requirements to start new banks were low, many banks were created during that time. Once the selling began, more selling was needed to satisfy margin calls and liquidity requirements for banks. People feared that their bank would collapse since, at that time, there were no guarantees on cash at the bank. That started a massive run on the banks to pull money out. Some banks were not able to fulfill the requests for withdrawal and closed their doors to people. Lending for business and consumers was ground to a halt. More panic followed as people lost their money and banks collapsed. People then rushed to withdraw their money and this created a domino effect. At that time, paper money was backed by gold. People started putting money under their mattresses instead of risking putting it in the bank.
Federal Reserve’s Role during the Great Depression
Cycles of ups and downs in the economy are normal. Throughout our history, we have had many recessions. Bad monetary policy can turn a recession into a major depression. The government began to increase interest rates, in 1929, from 3.5% to 5%. Some believe this is what caused the recession to come about in August of 1929. The government failed to act to stabilize or increase the money supply during The Great Depression. In fact, the supply of money fell by 30% between 1929 and 1933. Prices for goods were allowed to drop and banks were permitted to fail. This led to deflation. The government failed to restore confidence in the banking system. They didn’t engage in enough open market activities, such as buying up the bank loans to restore the banking system. Their mission at the time was to maintain the gold standard. That meant ensuring that there were sufficient gold reserves to meet the demands of the depositor, as well as ensuring that there was adequate demand for currency.
The Great Depression Facts, Effects and Events
During the Great Depression, the country was hit with an extremely large unemployment rate. By 1933, the unemployment rate had climbed from 3% to 25%. By 1932, over 13 million Americans had lost their jobs.
Between 1929 and 1932, incomes, on average, were reduced by 40%. Deflation took hold, reducing prices by 10% per year on goods. Foreclosures rose sharply. By 1934, nearly one-half of all residential loans were delinquent and over 1 million families lost their farms. In 1932 alone, 273,000 families were evicted from their homes. Between 1929 and 1932, construction of homes dropped by an incredible 80%.
The Great Plain States were hit even harder than other states. This is because they were hit by a severe drought. This is where the term “Dust Bowl” originated. Many companies were forced to close, due to the economic environment. Banks were closing at an alarming rate and in 1933 alone, more than 4,000 banks closed. By 1933, the GDP fell 33%. During the Great Depression, there were 2 million homeless people in the United States. The stock market hit a low in 1932 closing at 41.22, down 89.2% from its all-time high.
It is interesting to note that one industry actually did very well during this period of time. It was the Hollywood film industry. It is thought that people went to the movies because, for a brief time while at the movie, they could forget their many hardships. Comedies were big at this time and the Three Stooges provided a great deal of entertainment for many. The Wizard of Oz was released during this period in 1939.
Poor Family During The Great Depression
Policy Changes During The Great Depression
The role of the United States Government changed dramatically during the Great Depression. In 1932, Congress passes the Glass-Stegall Act which bans any connection between commercial banks and investment banking.
In 1933 Franklin Roosevelt takes office. He enacts his New Deal legislation. The Federal Deposit Insurance Corporation is created to ensure all deposits at banks. The U.S. goes off the gold standard that helped add a supply of money to the financial system.
In 1934, Congress passes the Securities and Exchange Act. This helped to police activities related to the selling of securities. The Trade Agreement Act was passed to help end the trade wars.
In 1935, the Social Security Act was established to give assistance to the unemployed, handicapped and elderly. The Banking Act was passed to strengthen the Federal Reserve System.
A Minimum Wage Bill was passed in 1938. This included implementing a 40-hour work week for workers of companies that participated in interstate commerce.
The demand this placed on the government created a need for a much larger government workforce. At the beginning of the Depression, there were approximately 553,000 civil employees on the government’s payroll. By the time the Depression ended, there were more than 953,000 paid civil workers.
Families Had to Relocate to Find Jobs
What Ended The Great Depression
On December 7, 1941, Japan attacked Pearl Harbor. The United States responded by borrowing over 1 billion dollars to build up its military. As a result, U.S. manufacturing jumps by 50%. In 1939, the GDP had started to grow again and the unemployment rate was falling. In 1939, the unemployment rates were at 17.2%. By 1942, the unemployment rate was under 5%.
A combination of government spending, prompted by World War II and monetary expansion is what ended the Great Depression.
The Federal Reserve and the government can put conditions in place that are optimal for economic growth but, ultimately, it’s the people that drive the economic growth, through innovation and growth in productivity. One can also conclude that this had some effect in ending the Great Depression. Innovation helps to increase demand for goods and growth in productivity helps to increase the output of goods.
Aftermath and Recovery
In the aftermath of the Great Depression, a lot of things changed. There were 10,000 banks that went out of business. Around one-half of all banks either closed or merged with other banks. The role of the Federal Reserve and government increased. Tighter regulations were put on financial markets and banks. The Federal Reserved shifted to a policy of maintaining high employment and fast growth.
The United States emerged from World War II as a super-power and maintained its status as the largest economy ever since.
77 Responses to The Great Depression Facts, Timeline, Causes, Pictures
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only if i could help the great depresion
I almost want to be there and experience that for like a day. it would be so cool to see what my grandparents went through. super helpful article
that was tragic my friend said that was good
poor poor cats
Really?
The entire world seems to be going through a mild depression today.
Are we going through the start of this now?
I think in 2008 we were heading down that road though it will take another major event for us to start down that path again.
certainly not to far off in the future of America. The world will suffer. . .more so than they already are. But, American youth do not believe we could be on the threshold of a great depression. I have seen it coming since Ronald Regan started on the east coast breaking the unions, then, jobs became more competitive, wages dropped, benefits changed, Insurance Premiums started to rise, and we began importing more drugs to dope down America through Florida. Thanks to the stategies of the Iran Contra affair. Fast forward to current day America, we are facing critical challenges in our financial “imbalance” within the infrastructure of America. Reminds me of the Great Depression. Only on a bigger scale. To mention on city that has been on my mind and in my heart. . .Detroit. 90,000 homes to be demolished as the city has shrunk due to industry changes and it has gone bankrupt. Correct me if I am wrong, but, this is the pattern all over America in some cases small exoduses, and in the case of Detroit, this is big. Our country is in the intensive care ward as far as I am concerned. People need to take head and listen to our elders who know what is happening, instead of bickering and fighting about whether or not the Republicans or Democrats are ahead in the right/wrong poles.
well inst someone an optimist cant you lokk on the bright side at least we will all see each other in hell
Yes, Patricia! Well said and I agree totally. So glad to know I am not the only one that sees it. This thing did not start in 2008 as they have deceitfully put out. It started with President Reagan in a slow but obvious attack on the working man. It came to alarming proportions in the early to mid 2000s but that train pulled out the station long before then. Now in 2017, we are still tittering on the brink of financial collapse. No wiggle room or real chance for the average Joe to save money or advance his status. That is just what THEY wanted. To stop the advancement of the upper lower class to middle class workers. Getting too much of the pie so they started stripping the systems that helped the average worker like unions. Then came the benefits and seniority which used to be a plus but now seniority is a bad things to many of these companies. They don’t want to pay out the higher salaries and benefits for experienced conscientious workers. They’d rather hire some inefficient, lazy, greenhorn they can pay lower salaries, keep everybody part-time so they don’t get any benefits at all or outsource to other countries.
your comment indeed is true about 2008. But, how do you feel that as a tax paying citezen, one who most likely takes pride in what you do, bailed out banks, those banks blessed their executive team with bonuses in the millions and we actually ended up borrowing money, using tax payers dollars to bail out the failing financial institutions. I believe the actual sum total was around $1.2 trillion dollars. That was the cost of doing business as a country that declared war on Iraq.
be nice
We never really recovered from 2008. show me the 3% growth anywhere. Show me where banks are freely lending money. shw me where the banks stoped playing derivitives. Show me where making the dollar stronger by raising interest rates. Repeating the same mistakes of the great dersession. look at our dept. look at all of europe’s country have a low dept to national GDP.Japan does much exporting. What happens when countries can no longer pay for the debt. have you heard of the contagan effect.? just google any europeans country debt to GDP.
Thank you for the sensible critique. Me and my neighbor were just preparing to do some research about this. We got a grab a book from our local library but I think I learned more from this post. I am very glad to see such great info being shared freely out there.
thats awesome!!:)
i think this is a really good web site!!
Agreed!
this is so awsome i guess
you guess?… ok so are basically a moron
uhhhhhhhh he didn’t mean the great depression was cool, he meant the article and history was interesting.
No, it was not awesome.
the great depression was very sad, i needed to do the report for it and i just want to say thanks for the information:)
An interesting article, yet not all the facts have been provided. I wonder if there is any truth in the following statement;
“It is important to note that the Federal Reserve is a private company, it is neither Federal nor does it have any Reserve. It is conservatively estimated that profits exceed $150 billion per year and the Federal Reserve has never once in its history published accounts.”
hey i am doin a report on the great depression its soo borin
same here;)
the makes three of us (;
welcome to my world
Well i have to write a page letter to my teacher though the eyes of people living through the great depression….
Yup me too…
I think that this cite should have more info about the children during this time because in school right now I am suppose to write a book on homeless teenager back during the Great Depression. And Edward that’s no cool.
glad i wasnt alive…soddy
I was born in March 1930, so I grew up during the depression. Now that I look back on those days, the one thing that stands out in my mind is that we were all poor. Since we were all poor and had never known anything else, we did not know we were poor! Everybody was “in the same boat” and we were grateful for what we had.
Mildred, you are probably a better person for having survived such hardship. You know the true meaning of community, unlike what passes for it today. And…you’re on the World Wide Web, sharing still! WTG Mildred!
Yes, Mildred. That is what my mother told me. She grew up in the country, down south and she said she didn’t notice much difference in her life during the depression. They lived on a small farm but she said the city folks felt it much more but everybody around her was poor and struggling in some way…some more than others.
I find a lot of opinion in this article, when it states that it is about facts. They went with one economist theory as to why the Federal Reserve was a part of the collapse. Which is not fact, but again, theory….
Mildred, you bring up a great point. Everyone seems to focus more on what they want or will lose in this day, than they do on what they have and how important it is to work with what you have, instead of dwell on what you don’t.
not awesome sad
this sucks to be in this class room and frigen picking my nose and it hurts like a mo fo and i just sneezed all over my self. I would say that that sucked a lot more than the Great Depression.
How about your whole family living in one bedroom, you are the only one working in the house of 1 mother and about 8 children, you are working five jobs but that’s still not enough. That is how your life might have been in the Great Depression.
Most of the time, no one had any jobs.
wow that sucks im sorry!!!
why would u say wow
I no rite that’s so sad
This article was written last year and is completely bias. It states in the article that;
“The government failed to restore confidence in the banking system. They didn’t engage in enough open market activities, such as buying up the bank loans to restore the banking system.”
That is complete hogwash and written by a true lover of the Federal Reserve. The Federal Reserve instigated the ENTIRE meltdown to give them more control over our currency. A little history about the Federal Reserve is that is not Federal, but a completely private bank, that controls and prints money out of thin air and controls the whole nations interest rates. Yes, they control it, not a free market, but a secretive bank that does not have to release their files to the public. The Federal Reserve itself was derived and signed into legislation after the first depression, with the promise to prevent further depressions. Hmm tell that to the second depression…. The last thing I will say about this horrible un-American institution is that is was signed into power on December 23 1913, during Christmas recess, while most members were off with their families. Passed under secrecy and without public rejection, because it only need a majority to pass. This establishment is the reason why our economy today is spending out of control, that will untimely lead to the greatest depression of them all.
Wow That’s very interesting I Think that this is very bizarre, and I think that you have done some serious research…Well Done
Hi I was wondering if I could use your photos for a school project, I would really appreciate it thank you!
“What were the names of the heros and the great depression”?
I think FDR did the right thing in the long run, don’t ask me about gold confiscation but he had to get America employed in stuff that created infrastructure projects that were beyond the scope of the private word. He got people employed on massive projects like the Hoover Dam and a lot of the interstate highways. He was almost certainly murdered by poison. Business will always be about control. I also suggest doing some digging on who the US federal reserve really are (their stockholders and accounts are sealed). They are your villains. 😉
Doing reseach on the great depression just having a little bit of problems finding the heros that are not from america
Doing a report and this really helped, thanks for the info!
that is so sad
Nine Elevin was my fault, me and Obama are bros.
I wonder how much a hooker costed? lol
Great Website! Thanks so much! Only if i could of helped with the Great Depression!
thanks for the information for my projected
so so so sad:( 🙁 🙁 🙁
This is very very sad
Thanks alot help me on the research of my hw
thanks bro. LITTY
I was wondering if you could tell me anything about a homeless person during the Great Depression, I have to tell what life was like being homeless in the Great Depression as if it was my life so I was just wondering if someone could help me out a little with the facts I would need to know I would really appreciate. Please and Thank You!(:
Just go out on the streats with just the clothes on your back for a week then youll no how thelived
You kiddies have no idea what it was all like. I do.
Because there were so few of us born then, we are called the Silent Generation.
great depression was sooooooo fun, Like I almost died but it was cool bra!
Why would you say that
Why would you say that every other person that went thru that would say that it was a horrible awful re were people going thru poverty And your telling me that it was “cool” you should have kept that “opinion” to you self
We should be careful what we complain about! Did anyone notice the pic on the family having to relocate. I know its best to pack light when traveling but were it all their stuff. Not even a bag each of clothes. And we think we got it bad. And these were the white folks….
This is great info!!! I had to use this info for my PRE-AP English for To Kill A Mockingbird
the great depression was not fun.. you can see that a lot of people had lost their jobs and became homeless and poor. it must’ve been hard trying to feed your family and kids. imagine if you guys were there. would it be fun? or would it be a disaster?. the great depression was a hard thing because if they let you go from your job because of the stock market crash and losing your job, its probably not the best feeling. that’s all I wanted to say.
True true.
From who did the U.S. Government borrow 1 Billion dollars?
In what form was it taken? And who had a Billion dollars to lend?
What interest rate? Was the Principle ever paid back in part or whole?
Are the slaves in government offices even making payments to the principle?
Why would you take the monetary system off of the gold standard which prevents hyperinflation?
Just saying, I smell bullshit in your story…
the great depression lots of people lost their jobs and lost their money
If you read between the lines:
– people lost their home
– farms were lost
– banks merged
– gold backed currency lost
– big government was created
– WWII
So the great depression = the great deception
Man, that great depression is wack i wish every man,woman, and child did not have to suffer thru them conditions
wait what were the four things that the people really needed?
how many people were homeless then?
pretty cool site but margin buying was awful
man this was a sad time