The Great Depression was the worst economic depression in United States history. It started on October 29, 1929, a day known as Black Tuesday when the stock market crashed. This crashing of the stock market actually started the previous Thursday when market dropped 9%. Historians point to several factors that caused this crash. Looking back some of the comparisons to today are interesting. Businesses were making great profits in the 1920s while workers were not making very much while still buying merchandise on credit. Another historian writes that the crash came during a period in which real estate prices were declining which had peaked four years earlier.
The stock market (the Dow Jones Industrial Average) peaked at 381.17 on September 3, 1929 and then fell losing 17% in that month. Then climbed back up gaining about 8% of the losses back.
The first real downturn that started the crash of 1929 was on Thursday, October 24, 1929, a day that is known in history as Black Thursday. The following Monday the market fell 38 points which was almost 13%. The next day was Black Tuesday when the market fell another 30.5 points, almost 12 % drop with a record volume of 16 millions shares traded. That volume record was not broken until 1968.
The stock market actually recovered about 60% between November 1929 and April 1930. Then the market started a slide in April 1931 that continued until July 8, 1932 when the stock market bottomed at 41.32, an 89% decline from its peak. The 1929 stock market peak of 381 would not be seen again until 1954.
Ironically, 16 out of the top 20 one-day record percentage gains for the stock market were during the depression. On October 30, 1929, just two days after Black Tuesday, the market went up 28 points, which was 12.3%. And you thought the market has been volatile the past couple of years.
When you look at the above numbers and see the stock market fell 38 points in one day, some might think that isn’t so bad. It is the percentage that matters. As I write this, the Dow Jones Industrial Average is around 8000, if the market fell 89% in the next couple of years it would be at 800, a level not seen in the Dow since about 1982.
By 1932, 40% of the banks in the US had failed.
In 1932 the government announced a temporary halt by banks of home foreclosures.
Unemployment reaches its worst point in 1933 with the unemployment rate at 25.2%.
When people think of the great Depression and the US presidents, they usually think of Franklin D. Roosevelt (FDR). When the depression started and for the next three years, the president was Herbert Hoover and FDR wasn’t elected until the fall of 1932.
Shortly after his inauguration, President Roosevelt blamed “unscrupulous money lenders” and a “generation of self-seekers” for the economic problems.
Between 1929 and 1932 the average income of the average American family dropped by 40% from $2,300 to $1,500 per year.
During the depression of the 1930s the average wage of manufacturer was $17 per week, for a doctor the average wage was $61 per week.
By the end of 1930, some 3 million children were forced to quit school and at least 200,000 of them took to the roads on their own.
The government came up with programs to put Americans to work repairing and building. The Empire State building, the Chrysler building, the Golden Gate Bridge and Rockefeller Center were all built during the depression.
The depression changed clothing as well when the zipper became widely used because buttons became too expensive.
The circulation of money was low and the need for coins had diminished so much that the US mints did not even mint nickels in 1932 or 1933.
The number one song in 1932 was “Brother, Can You Spare a Dime?” by Bing Crosby which pretty much summed up the 1930s.
In 1933, congress passed the Home Owners Refinancing Act, which provided mortgage money and other aid to struggling homeowners. By the end of this program in 1936, it provided loans for almost one million mortgages.
Between 1935 and 1938, 800,000 people left their homes in Arkansas, Missouri, Texas and Oklahoma because of the depression and the severe drought that had ruined their land and lives. This severe drought was known as the Dust Bowl.
At the time of the depression, the US and the world was on a gold standard, which meant that the US dollar was backed by gold, the government would redeem money for gold, at that time gold was $20 per ounce.
Many believe that it was the start of World War II in 1941 that ended the great Depression, others say that isn’t true and that the economy was starting to rebound in 1938 before the US entered the war. It could still be true that the war helped since World War II started in September 1939 when Germany invaded Poland and the US went into production to manufacture many items the British were going to need soon.
Sources:
Lone Star College Kingwood, TX library
Thepeoplehistory.com
The Worst Hard Time by Timothy Egan
Large photo essay of the Great Depression
