The Great Depression | Great Depression Causes | Life During The Great Depression

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.

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