The widespread prosperity of the 1920s ended abruptly with the stock market crash in October 1929 and the great economic depression that followed. The depression threatened people’s jobs, savings, and even their homes and farms. At the depths of the depression, over one-quarter of the American workforce was out of work. For many Americans, these were hard times.
Causes of the Great Depression
False Sense Of Prosperity Before The Great Depression
The 1920s, known as “The Roaring Twenties” marked a time when America was overdependent on production, automobiles were the leading industry, and there was a great disparity between rich and poor.
Global Crisis And The Great Depression
While America prospered during the 1920s, most of Europe, still reeling from the devastation of World War I, fell into economic decline.
Speculation And Overleverage In The Great Depression
With only loose stock market regulations in place before the Great Depression, investors were able speculate wildly, buying stocks on margin, needing only 10% of the price of a stock to be able to complete the purchase.
Bank Failures And The Great Depression
Once the stock market crashed, fearful that banks would fail, millions of Americans began to withdraw their money. Virtually overnight, they put thousands of banks in peril.
Lack Of Available Credit During The Great Depression
With massive draws on funds during the Great Depression, banks had no money to lend, and this lack of available credit led to a further worsening of economic conditions.
People Stopped Spending Money During The Great Depression
When the stock market crashed, and the banks failed, and unemployment levels reached higher and higher points, people understandably stopped spending money, which also deepened the economic crisis as demand for products and services ground to a halt.
High Unemployment Rates During The Great Depression
When consumer spending plummeted during the Great Depression, unemployment rose, reaching its highest level in 1933, when 25% of the workforce was idle.
Dust Bowl During The Great Depression
A drought that lasted from 1930 to 1936, known as the Dust Bowl, aggravated the problems of the Great Depression.
Timeline of Important Events from 1929
February 2nd: Federal Reserve announces a ban on bank loans for margin trades
March 4th: Herbert Hoover is inaugurated as President
June 15th: Agricultural Marketing Act passed
September 3rd: stock market prices peak, with New York Times index of industrial stocks at 452
October 24th: “Black Thursday,” recorded sales of shares hits 12,895,000
October 25th: market rallies, briefly
October 29th: “Black Tuesday,” The American stock market collapses, signaling the onset of the Great Depression.
November 13th: stock market prices reach low for the year, with New York Times index of industrial stocks at 224
Timeline of Important Events from 1930
May 30th: New York Times prints petition of 1,028 economists who oppose Smoot Hawley Tarrif Act
June 17th: Congress passes the Smoot-Hawley Tariff, steeply raising import duties in an attempt to protect American manufactures from foreign competition. The tariff increase has little impact on the American economy, but plunges Europe farther into crisis.
December 31st: By year’s end, 1350 banks have suspended operations during 1930
Timeline of Important Events from 1931
January 7th: the Committee for Unemployment Relief releases a report on unemployment showing that 4 to 5 million Americans were out of work.
January 19th: Hoover’s Wickersham Commission reports that enforcement of Prohibition has become almost impossible.
March 31st: Davis-Bacon Act becomes law, requiring “prevailing” wages to be paid on federal construction contracts
May 1st: New York’s 102-story Empire State Building dedicated
June 5th: Chancellor Bruning announces that Germany was no longer going to pay reparations under the Young Plan
July 23rd: Macmillan report on Britain’s international finances released, pointing out that Britain’s short-term liabilities to foreigners is several times the size of Britain’s gold reserves.
September 21st: Britain goes off the gold standard, the first major power to do so.
September: Japan invades Manchuria
October 16th: New York Federal Reserve Bank’s discount rate raised from 1.5 percent to 2.5 percent.
October 17th: mobster Al Capone was convicted of income tax evasion and sentenced to 11 years in prison.
October 23rd: New York Federal Reserve Bank’s discount rate raised from 2.5 percent to 3.5 percent.
December 11th: New York Bank of the United States collapses
December 31st: 2,293 banks have suspended operations during 1931
Timeline of Important Events from 1932
January 22nd: Reconstruction Finance Corporation created
March 1st: Charles Lindbergh’s 20-month-old son, Charles Augustus, Jr., is kidnapped from the family home in New Jersey.
May 20th: Amelia Earhart took off from Newfoundland for Ireland to become the first woman to fly solo across the Atlantic.
June 6th: Revenue Act of 1932 passed, the largest peacetime tax increase in the nation’s history to that date
July: Federal law updated to require that the names of banks borrowing from the Reconstruction Finance Corporation be made public.
July 21st: Emergency Relief and Construction Act passed
July 28th: Bonus Army Riot begins in Washington, D.C.
November 8th: Democrat Franklin D. Roosevelt defeats incumbent Republican President Herbert Hoover in a landslide to win the presidency.
December 31st: 1,493 banks have suspended operatins during 1932
Timeline of Important Events from 1933
January 5th: Construction begins on San Francisco’s Golden Gate Bridge
January 23rd: 20th Amendment ratified
January 31st: Adolf Hitler named Chancellor of Germany
February 15th: Chicago mayor Anton Cermak is killed during an assassination attempt in Miami, Florida on President-elect Roosevelt.
March 4th: Franklin D. Roosevelt is inaugurated into office as 32nd President of the United States.
March 6th: FDR declares a bank holiday
March 9th: bank holiday ends
March 9th: Emergency Banking Relief Act passed, providing for federal bank inspections
March 12th: FDR’s first Fireside Chat is broadcast over the radio.
March 20th: FDR signs Economy Act.
March 20th: Credit Act passed, indentifying those veterans and dependents of veterans who were entitled to a pension
March 31st: Reforestation Relief Act passed, creating the Civilian Conservation Corps
April: New York becomes the first to pass a state law regulating minimum producer, wholesale, and retail milk prices.
April 19th: America goes off the gold standard
May 12th: Agricultural Adjustment Act passed, authorizing paying farmers not to grow crops. Federal Emergency Relief Adminstration created. Farm Relief Act passed, creating the Farm Credit Administration and the Agricultural Adjustment Adminstiration
May 18th: Tennessee Valley Authority created
May 27th: Federal Securities Act passed
June 6th: National Cooperative Employment Service Act passed
June 13th: Home Owners’ Loan Act passed
June 16th: Farm Credit Act passed. Glass-Steagall Act passed. National Industrial Recovery Act passed. Emergency Railroad Transportation Act passed
October 17th: Albert Einstein arrived in the United States as a refugee from Nazi Germany.
November 8th: Civil Works Administration created by executive order
December 5th: 21st Amendment ratified: The Twenty-first Amendment (Amendment XXI) to the United States Constitution repealed the Eighteenth Amendment to the United States Constitution, which mandated nationwide Prohibition.
December 31st: approximately 4,000 banks have suspended operations in 1933
Timeline of Important Events from 1934
January 30th: Gold Reserve Act passed
January 31st: FDR issues an executive decree, changing the price of gold from $20.67 an ounce to $35 an ounce. Congress creates Federal Farm Mortgage Corporation.
February 2nd: Export-Import Bank of Washington created, established under DC charter by Executive Order 6581, to assist in financing U.S. trade with the Soviet Union.
February 23rd: Crop Loan Act passed
February 15th: Civil Works Emergency Relief Act passed.
April 7th: Jones-Connally Farm Relief Act passed, bill effectively placing an expanded roster of farm products under the control of the Agricultural Adjustment Administration.
May 23rd: bank robbers Bonnie Parker and Clyde Barrow were shot to death in a police ambush in Bienville Parish, Louisiana
June 6th: Securities Exchange Commission established
June 19th: Federal Communications Commission created
June 19th: Silver Purchase Act passed, empowering FDR to increase the Treasury’s silver holdings to 1/3 the value of gold.
June: Taylor Grazing Act passed
July 22nd: John Dillinger, Public Enemy Number One, shot by the FBI near a Chicago Theatre
August 2nd: German President Paul von Hindenburg dies, paving the way for Adolf Hitler’s complete takeover.
August 13th: the satirical comic strip “Li’l Abner,” created by Al Capp, makes its debut
November 6th: Democrats gain 9 seats in the House of Representatives. Anti-Rackateering Act passed. Commodity Credit Corporation created. Federal Farm. Bankruptcy Act passed. Federal Surplus Relief Corporation created. National Firearms Act passed. Reciprocal Trade Agreements Act passed. Bankhead Cotton Control Act passed
Timeline of Important Events from 1935
January 11th: Amelia Earhart becomes the first person to fly solo from Hawaii to California.
January 16th: Fred and “Ma” Barker killed outside Ocklawaha, Florida.
April 8th: Emergency Appropriations Relief Act passed, creating the Works Progress Administration
May 27th: Supreme Court unanimously declares Section 3 of the National Recovery Act to be unconstitutional, in Schecter Poultry Corporation v. United States. Section 3 empowered the President to implement industrial codes to regulate weekly employment hours, wages, and minimum ages of employees.
June: National Youth Adminstration created by executive order
June 3: Farm Credit Act passed
July 5th: National Labor Relations Act passed
August 14th: Social Security Act passed
August 23rd: Banking Act passed
August 28th: Public Utility Holding Company Act passed
August 30th: Bituminous Coal Conservation Act passed
August 30th: Revenue Act passed.
August: Neutrality Act passed
September 2nd: a Category 5 hurricane, the most intense ever recorded in U.S. History, hits the Florida Keys, killing over 400 people.
September 8th: Huey Long assassinated
November 5th: Parker Brothers releases board game, “Monopoly”. Davis-Bacon Act amended, lowering contract threshold to $2,000. Federal Power Act passed. Motor Carrier Act passed, extending federal regulatory authority to motor carriers engaged in interstate commerce. Rural Electrification Administration established. Soil Conservation Act passed
Timeline of Important Events from 1936
January 23rd: Adjusted Compensation Act passes, over Roosevelt’s veto. The Act provides for the immediate payment of veterans’ bonuses.
February 17th: Supreme Court upholds constitutionality of TVA in Ashwander v. Tennessee Valley Authority
February 29th: Soil Conservation and Allotment Act is passed
May 18th: Supreme Court declares the Bituminous Coal Conservation Act to be unconstitutional in Carter vs. Carter Coal Co.
August 1st: Olympics open in Berlin. General Theory of Employment, Interest, and Money, by John Maynard Keynes, published. Robinson-Patman Act passed, effectively outlawing price cutting by permitting price discrimination only if it can be justified by differential costs of serving different markets, or if a price reduction is made “in good faith” to meet the price reduction of a competitor. Rural Electrification Act passed, authorizing loans to qualified borrowers, with preference given to nonprofit and cooperative associations and public bodies, to construct and operate electric systems and generating plants. Domestic Allotment Act passed
November 3rd: Franklin D. Roosevelt is elected to a second term as president, winning in a landslide over Republican Alf Landon. Roosevelt wins every state but Maine and Vermont.
Timeline of Important Events from 1937
January 20th: FDR delivers his second inaugural address: “I see one-third of a nation ill-housed, ill-clad, ill-nourished.”
February 5th: FDR introduces the Judiciary Reorganization Bill
March 1st: Supreme Court Retirement Act passed, permitting Supreme Court Justices to retire at age 70 with full pay, after 10 years of service
March 29th: in West Coast Hotel v. Parrish, Supreme Court upholds a state minimum wage law for women.
April 12th: Supreme Court declares provisions of NLRA that guaranteed worker rights to unionize to be constitutional in National Labor Relations Board v. Jones & Laughlin Steel Corporation
May: economic recovery stops; economy enters a second depression
May 6th: Hindenburg disaster
May 24th: Supreme Court declares that the unemployment compensation provision of the SSA is constitutional in Steward Machine Co vs Davis
May 24th: Supreme Court declares that the old age benefits provisions of the SSA are constitutional in Helvering vs Davis
July 22nd: Bankhead-Jones Farm Tenant Act passed, creating the Farm Security Agency. The FSA established camps for migrant farm workers, provided medical care for those workers and their families, and helped in finding jobs.
September 1st: United States Housing Act passed, creating the US Housing Authority to administer low-interest 60-year loans to small communities for slum clearance and construction projects and to grant subsidies for setting rent geared to low-income levels in areas where local agencies provided 25% of the federal grant.
Timeline of Important Events from 1938
January 2nd: President Roosevelt establishes the March of Dimes.
February 16th: 2nd Agricultural Adjustment Act passed
June: economic contraction ends, economy begins to recover
June 23rd: Civil Aeronautics Authority established
June 25th: Food, Drug and Cosmetic Act signed into law
June 25th: Fair Labor Standards Act passed, enacting first national minimum wage law
September 30th: British and French prime ministers Neville Chamberlain and Édouard Daladier sign the Munich Pact with Nazi leader Adolf Hitler
October 30th: Orson Welles’ broadcast of “War of the Worlds” persuades thousands of Americans that the United States is being invaded by Martians
Timeline of Important Events from 1939
January 7th: Labor leader Tom Mooney freed by California Governor Olson after 22 years imprisonment.
February 20th: The German-American Bund stages a huge rally of fascist sympathizers supporting what they call “True Americanism” in Madison Square Garden in New York. Anti-Semitic Hitler admirer and Bund leader Fritz Kuhn calls Franklin Roosevelt “Frank Rosenfeld,” the New Deal “The Jew Deal.”
February 27th: in NLRB v. Fansteel Metallurgical Corp, Supreme Court rules sit-down strikes illegal.
April 30th: New York Worlds Fair opens in Flushing Meadows
August 2nd: Albert Einstein signed a letter to President Franklin Roosevelt urging creation of an atomic weapons research program.
September 1st: Germany invades Poland
Timeline of Important Events from 1940
September 16th: Selective Training and Service Act passed, requiring men between the ages of 21 and 35 to register for military training
November 7th: FDR defeats Wendell Willkie to win third term as President. Investment Advisers Act passed, allowing SEC to supervise the activities of investment advisors. Investment Company Act passed, allowing SEC to supervises the activities of mutual funds and other investment companies
Transportation Act passed, giving ICC authority to regulate common carriers operating in interstate commerce in the coastal, intercoastal, and inland waters of the U.S.
Timeline of Important Events from 1941
January 6th: President Roosevelt delivers his State of the Union address, saying “we look forward to a world founded upon four essential human freedoms.”
January 7th: Office of Price Administration is created. Davis-Bacon Act amended to include military construction
March: Lend-Lease Act passed, giving the president the authority to aid any nation whose defense he believed vital to the United States and to accept repayment “in kind or property, or any other direct or indirect benefit which the President deems satisfactory.”
May 1st: the Orson Welles motion picture “Citizen Kane” premiered in New York
December 7th: Japanese attack Pearl Harbor
December 8th: U.S. declares war on Japan
December 11th: Germany and Italy declare war on U.S which starts our heavy involvement in WW2.
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. Roosevelt’s 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. 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
FDR’s New Deal increased the role of government in people’s 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.
Terms Used During the Great Depression
Business Cycle: The pattern of changes in economic growth that appear to be cyclic overtime.
Contraction: A period in which there is a decline in the growth rate of the economy; also called a recession.
Depression: A recession that is extremely severe.
Expansion: A term used synonomously with “recovery.”
Recession: A temporary economywide decline in output.
Recovery: The period following a contraction in which the economy experiences increased growth, sometimes at a faster-than-normal rate.
Say’s Law: “Supply creates its own demand” is the brief way of stating a law named after French economist Jean-Baptiste Say.
Yellow Dog Contract: An agreement between an employer and an employee in which the employee agrees, as a condition of employment, not to join a union during the course of his employment. Made illegal in 1932, by the Norris-La Guardia Act.