On October 29, 1929 the United States experienced the greatest stock market crash in its history. That day would come to be known as Black Tuesday and it marked the beginning of a decade-long era of economic and agricultural poverty known as The Great Depression. During The Great Depression, banks closed taking account-holders’ money with them, incomparable numbers of people lost their jobs, factories ceased production, and incomes plummeted. Only through governmental intervention and much political reform was the nation able to emerge from its darkest time. The First and Second New Deal, designed by Franklin Delano Roosevelt and carried out by his administration created a number of relief programs that became the saving grace for many families.
Economic Impacts of the Great Depression
It is very common to associate the stock market crash on Black Tuesday of 1929 with the start of the Great Depression. Indeed it was the immediate cause, but the stock market didn’t just crash suddenly. There were events and actions that led to its downfall. As the stock prices rose throughout the 1920s, more and more people invested. Many bought on margin, which required them to pay only 10% of the stock’s value with acquisition. Doing this caused the value of the stocks to rise higher than the value of the companies they represented. Expecting money from the stock market that would never come, a lot of people made major purchases such as refrigerators and cars on credit. When the stock market crashed, they could no longer pay their debt. With so many people in the red, they certainly couldn’t afford to buy any new products. When factories discovered their products weren’t selling, they cut back production and commenced to lay off many workers. Then with more people without jobs, even fewer products were sold. The Gross Domestic Product fell 30%.
President Hoover did nothing to fix the economy, believing that it would right itself with time. However, the majority of voters did not agree with this principle. Citing the squalid residential areas and re-dubbing them ” Hoovervilles ,” Hoover’s administration was permanently damaged. He was defeated in the 1932 election by Franklin Delano Roosevelt.
Agricultural Impacts of the Great Depression
Aside from the monetary troubles people incurred surrounding the stock market crash, there were other issues contributing to the poverty of the nation. While some of the most publicized effects of the Great Depression are seen in cities, the rural areas were also affected. Farmers were hit very hard. The Depression drove their prices down, but they could not produce more because of consistently bad weather and hordes of chinch bugs and grasshoppers that infested their lands and ate their crops. Some lands became so barren that farmers had to scrounge up leaves from trees just to feed their cattle. Many Southern and Midwestern states such as Texas, Utah, Arkansas and Oklahoma were experiencing an especially severe drought as a result of overgrazing and lack of precipitation. This drought came to be known as the Dust Bowl. With the lack of jobs in West-coast states, those who tried to escape the Dust Bowl were turned away. Some alleviation came with the 1933 Agricultural Adjustment Act which paid farmers not to raise livestock or grow crops.
Life during the Great Depression
With nowhere to be and significant desperation that needed amending, many began to protest. They marched, and on more than one occasion were shot by authorities. People also rebelled against the landlords of their neighbors, moving their belongings back inside after they had been evicted. Both school days and school years were shortened because they could not afford to be kept open. Crime also rose dramatically. In the West, the Dust Bowl was so strong that many places could not see the sun for months at a time. It also made the air harder to breathe and many died from inhaling too much dust. On top of the deaths resulting from starvation and disease, the suicide rate climbed to 14 – 17 per 100,000.
Impact of the Great Depression on Industry and Labor
More than 12.5 million people were unemployed. In fact, some historians estimate that 25% of the population was unemployed. Jobs were in such high demand that they were nearly impossible to find. Many families traveled great distances and still found no employment. The ones that were lucky enough to secure jobs worked for extremely low wages. With little to no income, it was genuinely tough to survive on one’s own, let alone support a family. In 1933 The National Recovery Administration was put in place to generate more jobs.
End of the Depression
The election of Franklin Roosevelt was the first step to ending the depression. He introduced a comprehensive policy he referred to as the New Deal. It focused on many trickle-down policies and established many relief programs between the years of 1933 and 1936. Some of the programs introduced by the New Deal include the Social Security Act which established pensions for the elderly, disabled and the unemployed, the Public Works Administration which built schools and ports to stimulate the economy, and the Civilian Conservation Corps which employed young men for planting trees and building bridges and parks. There were a number of other programs established by the New Deal, and several more as part of Roosevelt’s second New Deal from later that decade. Many people credit Roosevelt’s New Deal for ending the Great Depression. While it certainly helped a lot of people, it did little to shift the economy. It wasn’t until the outbreak of World War II that the economy was once again sparked.
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