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What was the Great Depression?

The Great Depression, which began in the United States in 1929 and spread worldwide, was the longest and most severe economic downturn in modern history. It was marked by steep declines in industrial production and in prices (deflation), mass unemployment, banking panics, and sharp increases in rates of poverty and homelessness.

How did the Great Depression affect the economy?

The economic impact of the Great Depression was enormous, including both extreme human suffering and profound changes in economic policy.

What was the downturn in 1929?

The downturn became markedly worse, however, in late 1929 and continued until early 1933. Real output and prices fell precipitously. Between the peak and the trough of the downturn, industrial production in the United States declined 47 percent and real gross domestic product (GDP) fell 30 percent.

What were the factors that affected the economy in the 1930s?

Four factors played roles of varying importance. (1) The stock market crash of 1929 shattered confidence in the American economy, resulting in sharp reductions in spending and investment. (2) Banking panics in the early 1930s caused many banks to fail, decreasing the pool of money available for loans. (3) The gold standard required foreign central ...

Where was the worst depression in the world?

The Depression was particularly long and severe in the United States and Europe; it was milder in Japan and much of Latin America. Perhaps not surprisingly, the worst depression ever experienced by the world economy stemmed from a multitude of causes.

When did Latin America go into depression?

A number of countries in Latin America fell into depression in late 1928 and early 1929, slightly before the U.S. decline in output. While some less-developed countries experienced severe depressions, others, such as Argentina and Brazil, experienced comparatively mild downturns.

When did the British economy stop declining?

The British economy stopped declining soon after Great Britain abandoned the gold standard in September 1931, although genuine recovery did not begin until the end of 1932. The economies of a number of Latin American countries began to strengthen in late 1931 and early 1932.

What were the causes of the Great Depression?

The stock market crash signaled the beginning of the Great Depression, but it was only one factor among many root causes of the Depression. A weak banking system, further collapse in already-low farm prices, and industrial overproduction each contributed to the economic downturn.

How did Hoover respond to the economic downturn?

President Hoover initially met the economic downturn from the perspective of his long-held voluntarist principles—that is, his belief in minimal government interference in the economy, as well as a conviction that direct public relief to individuals would weaken individual character, turn people away from the work-ethic, and lead them to develop a dependency on government handouts. By 1931 Hoover reversed his earlier approach and embraced government intervention in the economy. The 1932 Reconstruction Finance Corporation (RFC) authorized the lending of $2 billion to banks, railroads, and other privately held companies, and in July 1932 the federal government appropriated $300 million for the nation’s first relief and public works projects.

What was the worst economic downturn in the US history?

The Great Depression was the worst economic downturn in US history. It began in 1929 and did not abate until the end of the 1930s. The stock market crash of October 1929 signaled the beginning of the Great Depression. By 1933, unemployment was at 25 percent and more than 5,000 banks had gone out of business.

How many people were out of work in the 1930s?

By 1930 there were 4.3 million unemployed; by 1931, 8 million; and in 1932 the number had risen to 12 million. By early 1933, almost 13 million were out of work and the unemployment rate stood at an astonishing 25 percent.

What was the Roaring 20s?

The Roaring 20s was a time of economic prosperity , and the stock market was going up and up. Most people believed that it would go up forever. Some people during that time did point out problems with the stock market and claimed that it was a bubble, meaning that the stock market would eventually fall.

What was the stock market like in the 1920s?

During the 1920s, millions of Americans were buying stocks. Some bought them on credit, so they borrowed money, invested it in the stock market and hoped to repay the loan with the money and profits they make. The Roaring 20s was a time of economic prosperity, and the stock market was going up and up.

What happened on October 29, 1929?

The October 1929 downturn was only the beginning of the market collapse.

What was the Great Depression?

PHOTO GALLERIES. The Great Depression was the worst economic downturn in the history of the industrialized world, lasting from 1929 to 1939. It began after the stock market crash of October 1929, which sent Wall Street into a panic and wiped out millions of investors. Over the next several years, consumer spending and investment dropped, ...

How many people were unemployed during the Great Depression?

By 1933, when the Great Depression reached its lowest point, some 15 million Americans were unemployed and nearly half the country’s banks had failed.

What was the only industrialized country in the world without unemployment insurance?

When the Great Depression began, the United States was the only industrialized country in the world without some form of unemployment insurance or social security. In 1935, Congress passed the Social Security Act, which for the first time provided Americans with unemployment, disability and pensions for old age.

How many people were looking for work in 1930?

Despite assurances from President Herbert Hoover and other leaders that the crisis would run its course, matters continued to get worse over the next three years. By 1930, 4 million Americans looking for work could not find it; that number had risen to 6 million in 1931.

What were the programs of the New Deal?

Among the programs and institutions of the New Deal that aided in recovery from the Great Depression were the Tennessee Valley Authority (TVA), which built dams and hydroelectric projects to control flooding and provide electric power to the impoverished Tennessee Valley region, and the Works Progress Administration (WPA), a permanent jobs program that employed 8.5 million people from 1935 to 1943.

What was the idea of Hoover's administration?

In the face of this dire situation, Hoover’s administration tried supporting failing banks and other institutions with government loans; the idea was that the banks in turn would loan to businesses, which would be able to hire back their employees.

What happened in the 1930s?

In 1930, severe droughts in the Southern Plains brought high winds and dust from Texas to Nebraska, killing people, livestock and crops.

What was the beginning of the Great Depression?

The Beginnings of the Great Depression. The stock market crash of October 1929 marked the beginning of the worst depression in American history, from which the country did not really begin to rebound until the start of World War II. The human toll of the economic collapse is difficult to calculate. By 1933, more than 13 million Americans were out ...

What was Hoover's response to the Depression?

Hoover's response to the Depression. Direct federal relief to the unemployed ran counter to Hoover's strong beliefs about the limited role of government. As a result, he responded to the economic crisis with a goal of getting people back to work rather than directly granting relief.

How did Franklin Roosevelt get out of the Depression?

Elected in a landslide in 1932 for the first of his four terms, Franklin Roosevelt tried to bring the country out of the Depression through a combination of deficit spending and federal programs known as the New Deal . Even before the stock market crash, there were signs that the prosperity of the 1920s was on shaky ground.

What happened to the stock market in the 20s?

The stock market crash. Stocks were bought on credit like many other commodities in the '20s. Millions of investors paid as little as 25 percent of the face value of a stock, and paid off the balance when the stock was sold after the price went up.

What happened to agriculture in 1929?

Agriculture had been depressed since the end of World War I, and both industrial production and the employment level dipped in mid 1929. The warning signs were there but went largely unheeded by the government and public alike. The stock market crash. Stocks were bought on credit like many other commodities in the '20s.

How many people were out of work in 1933?

The human toll of the economic collapse is difficult to calculate. By 1933, more than 13 million Americans were out of work, tens of thousands of business had failed, and the number of farm foreclosures grew.

How much was wheat worth in 1932?

Additionally, farm prices continued their decade‐long fall. Wheat that had sold for more than two dollars a bushel in 1919 was worth just over 30 cents in 1932.

What was the cause of the Great Depression?

The depression was caused by the stock market crash of 1929 and the Fed’s reluctance to increase the money supply. GDP during the Great Depression fell by half, limiting economic movement. A combination of the New Deal and World War II lifted the U.S. out of the Depression.

How much did the stock market crash cost in 1929?

It began on “Black Thursday," Oct. 24, 1929. Over the next four days, stock prices fell 22% in the stock market crash of 1929. 1 That crash cost investors $30 billion, the equivalent of $396 billion today. That terrified the public because the crash cost more than World War I. The Depression had begun earlier in August when the economy contracted.

What have central banks learned from the past?

Central banks around the world, including the Federal Reserve, have learned from the past. There are better safeguards in place to protect against catastrophe, and developments in monetary policy help manage the economy. The Great Recession, for instance, had a significantly smaller impact. 16.

How many agencies did the New Deal create?

He promised to create federal government programs to end the Great Depression. 12 Within 100 days, he signed the New Deal into law, creating 42 new agencies throughout its lifetime. 13 They were designed to create jobs, allow unionization, and provide unemployment insurance. Many of these programs still exist.

When did the Fed raise the Fed funds rate?

The Fed began raising the fed funds rate in the spring of 1928. It kept increasing it through a recession that started in August 1929. When the stock market crashed, investors turned to the currency markets. At that time, the gold standard supported the value of the dollars held by the U.S. government.

Is it possible for the Great Recession to happen again?

While anything is possible, it's unlikely to happen again. Central banks around the world, including the Federal Reserve, have learned from the past. There are better safeguards in place to protect against catastrophe, and developments in monetary policy help manage the economy. The Great Recession, for instance, had a significantly smaller impact. 16