The Great Depression

It’s not uncommon for modern-day historians and economists to mention the Great Depression, lasting from 1929 to 1939, because it was the worst economic downturn in the United States’ history. This difficult and incomparable time in America meant that millions lost their jobs, homes, and savings, and widespread poverty and homelessness ensued. History reminds us of low days and the fortitude of people to overcome obstacles to experience brighter days ahead. This haunting time in history, marked by human suffering, is well worth learning from to avoid similar economic disasters in the future.

What Caused It?

The Great Depression didn’t happen in America alone. It was a severe global crisis with many complex factors at play. The beginning of the Great Depression in the U.S. and the world was marked by the stock market crash of 1929, also known as the Wall Street Crash of 1929 or the Great Crash. Black Thursday (October 24, 1929) was the start, with even greater losses incurred on Black Tuesday (October 29, 1929). Causes of the crash were numerous to include speculative boom, overvalued stocks, margin buying, loss of confidence, and economic weakness.

• Speculative boom: The 1920s experienced a rapid economic boom, leading to economic growth, optimism, and excessive speculation in the stock market.
• Overvalued stocks: Stocks were generally trading at prices that exceeded their actual value.
• Margin buying: Investors were borrowing heavily from brokers to purchase stocks. According to experts, this amplified both gains and losses.
• Loss of confidence: As the market began to decline, investors lost confidence and started to sell off shares. This triggered a cascade of selling.
• Economic weakness: Underlying economic woes, such as overproduction, low wages, and excessive debt, contributed to the vulnerability of the market.

What Happened?

Not only did the stock market collapse, with the Dow Jones Industrial Average plummeting and wiping out billions of dollars in market value, but the banks also experienced failure. This meant that most banks that invested heavily in the stock market or had made risky loans would experience bank runs and losses. The stock market crash also triggered business failures, long unemployment lines, and widespread poverty, with a ripple effect felt across the globe.

Did Anyone Make Money from the Stock Market Crash?

Per National Archives Hoover Heads, the blog of the Herbert Hoover Library and Museum, “Several individuals who bet against or ‘shorted’ the market became richer.”

For most, this dark time in history resulted in factory shutdowns, farm and home foreclosures, abandoned mills and mines, and more. Those who had jobs faced lower wages, which made it challenging to save and spend. At the height of the Depression in 1933, approximately 12,830,000 people were unemployed, not counting farmers. Dramatic drops in farm commodity prices resulted in hard-working farmers losing their lands and homes due to foreclosure.

Starving people were forced to adapt and be resourceful, relying on sharing and community support and shifting toward self-sufficiency. To survive, folks sold off goods and bartered services, pooled resources, and relied on government work programs and public assistance to meet their needs. Even so, programs were often insufficient to meet needs. Soup kitchens, started by churches and charities to feed the hungry, emerged and featured long bread lines. Families began cultivating gardens, raising chickens and rabbits, and relying on canned food. People became frugal, such as going without meat or milk, with some buying used bread. Penniless people were forced to make shoes out of cardboard and cotton. Per DigitalHistory.uh.edu, vagrancy shot up due to mass evictions. “In the Pennsylvania coal fields, three or four families crowded together in one-room shacks and lived on wild weeds. In Arkansas, families were found inhabiting caves. In Oakland, California, whole families lived in sewer pipes.”

Lack of jobs and displacement of the workforce resulted in families splitting up or moving to look for work. This resulted in the building of shantytowns, politicized as “Hoovervilles,” built of packing crates, scrap metal from cars, and other materials. Droughts and dust storms across the Great Plains made matters dangerous, and many Americans grew weary of the economic policies of President Herbert Hoover. The disdain of the American people toward Hoover grew evident and ultimately paved the way for Franklin D. Roosevelt’s 1933 Presidency, offering a “New Deal” for Americans to help jumpstart the economy and get people back to work. Despite Roosevelt’s efforts, which ultimately pushed reliance on the government, a full recovery was not observed until the late 1930s.

Many historians and economists fittingly describe the Great Depression as an unprecedented, disastrous, and scary economic period in American and global history. During those trying times when life hit rock bottom for most Americans, many were unaware of their future. Little did they know that they would soon be facing the wrath of war, sending young men to fight Hitler and the Japanese abroad. Per FDRlibrary.org, “The Great Depression tested the fabric of American life as it has seldom been before or since. It caused Americans to doubt their abilities and their values. It caused them to despair. But they weathered the test, and as a nation, emerged stronger than ever, prepared to take on the new challenges as a world at war.”