Was the U.S. affected by the Long Depression?
Long Depression
Nobel laureate economist Milton Friedman, author of "A Monetary History of the United States", on the other hand, blamed this prolonged economic crisis on the imposition of a new gold standard, part of which he referred to by its traditional name, The Crime of 1873. This forced shift into a currency whose supply was limited by nature, unable to expand with demand, caused a series of economic and monetary contractions that plagued the entire period of the Long Depression. Murray Rothbard, in his book "History of Money and Banking of the United States", argues that the long depression was only a misunderstood recession since real wages and production were actually increasing throughout the period. Like Friedman, he attributes falling prices to the resumption of a deflationary gold standard in the U.S. after the Civil War.
History of the United States
In the Depression years, the United States remained focused on domestic concerns while democracy declined across the world and many countries fell under the control of dictators. Imperial Japan asserted dominance in East Asia and in the Pacific. Nazi Germany and Fascist Italy militarized and threatened conquests, while Britain and France attempted appeasement to avert another war in Europe. U.S. legislation in the Neutrality Acts sought to avoid foreign conflicts; however, policy clashed with increasing anti-Nazi feelings following the German invasion of Poland in September 1939 that started World War II. Roosevelt positioned the U.S. as the "Arsenal of Democracy", pledging full-scale financial and munitions support for the Allies – but no military personnel. This was carried out through the Lend-Lease agreements. Japan tried to neutralize America's power in the Pacific by attacking Pearl Harbor on December 7, 1941, which catalyzed American support to enter the war.
History of Western civilization
In October 1929 the New York stock market crashed, leading to the Great Depression. Many lost their life's savings and the resulting decline in consumer spending led millions to lose their jobs as banks and businesses closed. In the Midwestern United States, a severe drought destroyed many farmers' livelihoods. In 1932, Americans elected Franklin D. Roosevelt president. Roosevelt followed a series of policies which regulated the stock market and banks, and created many public works programs aimed at providing the unemployed with work. Roosevelt's policies helped alleviate the worst effects of the Depression, although by 1941 the Great Depression was still ongoing. Roosevelt also instituted pensions for the elderly and provided money to those who were unemployed. Roosevelt was also one of the most popular presidents in U.S. history, earning re-election in 1936, and also in 1940 and 1944, becoming the only U.S. president to serve more than two terms.
Wall Street Crash of 1929
The American mobilization for World War II at the end of 1941 moved approximately ten million people out of the civilian labor force and into the war. World War II had a dramatic effect on many parts of the economy, and may have hastened the end of the Great Depression in the United States. Government-financed capital spending accounted for only 5 percent of the annual U.S. investment in industrial capital in 1940; by 1943, the government accounted for 67 percent of U.S. capital investment.
Wall Street Crash of 1929
The 1929 crash brought the Roaring Twenties to a halt. As tentatively expressed by economic historian Charles P. Kindleberger, in 1929, there was no lender of last resort effectively present, which, if it had existed and been properly exercised, would have been key in shortening the business slowdown that normally follows financial crises. The crash instigated widespread and long-lasting consequences for the United States. Historians still debate whether or not the 1929 crash sparked the Great Depression or if it merely coincided with the bursting of a loose credit-inspired economic bubble. Only 16% of American households were invested in the stock market within the United States during the period leading up to this depression, suggesting that the crash carried somewhat less of a weight in causing it.
However, the psychological effects of the crash reverberated across the nation as businesses became aware of the difficulties in securing capital market investments for new projects and expansions. Business uncertainty naturally affects job security for employees, and as the American worker (the consumer) faced uncertainty with regards to income, naturally the propensity to consume declined. The decline in stock prices caused bankruptcies and severe macroeconomic difficulties, including contraction of credit, business closures, firing of workers, bank failures, decline of the money supply, and other economically depressing events.
Causes of the Great Depression
More recent research, by economists such as Temin, Ben Bernanke, and Barry Eichengreen, has focused on the constraints policy makers were under at the time of the Depression. In this view, the constraints of the inter-war gold standard magnified the initial economic shock and were a significant obstacle to any actions that would ameliorate the growing Depression. According to them, the initial destabilizing shock may have originated with the Wall Street Crash of 1929 in the U.S., but it was the gold standard system that transmitted the problem to the rest of the world.
Great Depression in Australia
Australia suffered badly during the period of the Great Depression of the 1930s. The Depression began with the Wall Street Crash of 1929 and rapidly spread worldwide. As in other nations, Australia suffered years of high unemployment, poverty, low profits, deflation, plunging incomes, and lost opportunities for economic growth and personal advancement.
List of recessions in the United States
There have been as many as 47 recessions in the United States dating back to the Articles of Confederation, and although economists and historians dispute certain 19th-century recessions, the consensus view among economists and historians is that "The cyclical volatility of GNP and unemployment was greater before the Great Depression than it has been since the end of World War II." Cycles in the country's agricultural production, industrial production, consumption, business investment, and the health of the banking industry contribute to these declines. U.S. recessions have increasingly affected economies on a worldwide scale, especially as countries' economies become more intertwined.
Long Depression
Wells notes that many of the government inquires on the "depression of prices" (deflation) found various reasons such as the scarcity of gold and silver. Wells showed that the US money supply actually grew over the period of the deflation. Wells noted that deflation lowered the cost of only goods that benefited from improved methods of manufacturing and transportation. Goods produced by craftsmen and many services did not decrease in value, and the cost of labor actually increased. Also, deflation did not occur in countries that did not have modern manufacturing, transportation, and communications.
Chicago railroad strike of 1877
The Long Depression, sparked in the United States by the Panic of 1873, had far-reaching implications for US industry, closing more than a hundred railroads in the first year and cutting construction of new rail lines from of track in 1872 to in 1875. Approximately 18,000 businesses failed between 1873 and 1875, production in iron and steel dropped as much as 45 percent, and a million or more lost their jobs. In 1876, 76 railroad companies went bankrupt or entered receivership in the US alone, and the economic impacts rippled throughout many economic sectors throughout the industrialized world.
List of recessions in the United States
Major modern economic statistics, such as unemployment and GDP, were not compiled on a regular and standardized basis until after World War II. The average duration of the 11 recessions between 1945 and 2001 is 10 months, compared to 18 months for recessions between 1919 and 1945, and 22 months for recessions from 1854 to 1919. Because of the great changes in the economy over the centuries, it is difficult to compare the severity of modern recessions to early recessions. No recession of the post-World War II era has come anywhere near the depth of the Great Depression, which lasted from 1929 until 1941 and was caused by the 1929 crash of the stock market and other factors.
Great Depression in the United States
Nobel laureate economist Milton Friedman and his fellow monetarist Anna Schwartz argued that the Federal Reserve could have stemmed the severity of the Depression, but failed to exercise its role of managing the monetary system and ameliorating banking panics, resulting in a Great Contraction of the economy from 1929 until the New Deal began in 1933. This view was endorsed by Fed Governor Ben Bernanke who made this statement in a speech honoring Friedman and Schwartz:
Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression, you're right. We did it. We're very sorry. But thanks to you, we won't do it again.
— Ben S. Bernanke
Great Depression in the United States
The memory of the Depression also shaped modern theories of economics and resulted in many changes in how the government dealt with economic downturns, such as the use of stimulus packages, Keynesian economics, and Social Security. It also shaped modern American literature, resulting in famous novels such as John Steinbeck's "The Grapes of Wrath" and "Of Mice and Men".
Labor history of the United States
The stock market crashed in October 1929, and ushered in the Great Depression. By the winter of 1932–33, the economy was so perilous that the unemployment rate hit the 25 percent mark. Unions lost members during this time because laborers could not afford to pay their dues and furthermore, numerous strikes against wage cuts left the unions impoverished: "one might have expected a reincarnation of organizations seeking to overthrow the capitalistic system that was now performing so poorly. Some workers did indeed turn to such radical movements as the Communist Party, but, in general, the nation seemed to have been shocked into inaction".
International relations (1919–1939)
The Great Depression in Latin America had a devastating impact, as the demand for its raw materials drastically declined, undermining the critical export sector. Chile, Peru, and Bolivia were hardest hit. Intellectuals and government leaders in Latin America turned their backs on the older economic policies and turned toward import substitution industrialization. The goal was to create self-sufficient economies, which would have their own industrial sectors and large middle classes and which would be immune to the ups and downs of the global economy. Despite the potential threats to United States commercial interests, the Roosevelt administration (1933–1945) understood that the United States could not wholly oppose import substitution. Roosevelt implemented a Good Neighbor policy and did not block the nationalization of some American companies in Latin America. Mexican President Lázaro Cárdenas nationalized American oil companies, out of which he created Pemex.
Great Depression in the United States
The New Deal was, and still is, sharply debated. The business community, with considerable support from such conservative Democrats as Al Smith, launched a crusade against the New Deal, warning that a dangerous man had seized control of the economy and threatened America's conservative traditions. Scholars remain divided as well. When asked whether "as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression," 74% of American university professors specializing in economic history disagreed, 21% agreed with provisos, and 6% fully agreed. Among respondents who taught or studied economic theory, 51% disagreed, 22% agreed with provisos, and 22% fully agreed.
Long Depression
In the United States, the National Bureau of Economic Analysis dates the recession through March 1879. In January 1879, the United States returned to the gold standard which it had abandoned during the Civil War; according to economist Rendigs Fels, the gold standard put a floor to the deflation, and this was further boosted by especially good agricultural production in 1879. The view that a single recession lasted from 1873 to 1896 or 1897 is not supported by most modern reviews of the period. It has even been suggested that the trough of this business cycle may have occurred as early as 1875.
In fact, from 1869 to 1879, the US economy grew at a rate of 6.8% for real net national product (NNP) and 4.5% for real NNP per capita. Real wages were flat from 1869 to 1879, while from 1879 to 1896, nominal wages rose 23% and prices fell 4.2%.
Long Depression
David Ames Wells (1890) wrote of the technological advancements during the period 1870–90, which included the Long Depression. Wells gives an account of the changes in the world economy transitioning into the Second Industrial Revolution in which he documents changes in trade, such as triple expansion steam shipping, railroads, the effect of the international telegraph network and the opening of the Suez Canal. Wells gives numerous examples of productivity increases in various industries and discusses the problems of excess capacity and market saturation.
Great Recession in the United States
On December 1, 2008, the National Bureau of Economic Research (NBER) declared that the United States entered a recession in December 2007, citing employment and production figures as well as the third quarter decline in GDP. The Dow Jones Industrial Average lost 679 points that same day. On January 4, 2009, Nobel Memorial Prize–winning economist Paul Krugman wrote, "This looks an awful lot like the beginning of a second Great Depression."
Montana State University
The college suffered greatly during the Great Depression. The price of agricultural products (Montana's economic mainstay) soared during World War I, as European and Russian farms were devastated by military campaigns and American and European armies demanded food. For a few years after the war, these prices stayed high. But as European agriculture got back on its feet, an agricultural depression swamped the United States beginning about 1923. State tax revenues plunged, and fewer buildings were constructed on campus after 1923. The United States entered the Great Depression in 1929. President Franklin D. Roosevelt established the Public Works Administration (PWA) in 1933 to provide federal funding for public works construction as a means of economic stimulus. But President Atkinson was strongly opposed to Roosevelt's New Deal, and refused to accept PWA funds to expand the college. With the state unable to assist, Montana State College stagnated through the 1930s.
The Great Depression: America, 1929–1941
The Great Depression: America, 1929–1941 () is a 1984 history of the Great Depression by acclaimed historian Robert S. McElvaine. In this interpretive history, McElvaine discusses the causes and the results of the worst depression in American history, covering the time from 1929 to 1941. He examines the causes of this cataclysmic event, its impact upon the American people, and the political, governmental, and cultural responses to it. He comes down firmly in favor of the "demand-side" argument that maldistribution of income in the 1920s having left the bulk of potential consumers with too small a share of national income to buy all that mass production was putting on the market was the principal cause of the collapse. Building on his innovative use of letters written by "ordinary" Americans during the Depression that were collected in his first book, "Down and Out in the Great Depression", McElvaine takes readers into the experience of Depression victims to an extent never before achieved.
Great Depression
The Great Depression started in the United States after a major fall in stock prices that began around September 4, 1929, and became worldwide news with the stock market crash of October 29, 1929 (known as Black Tuesday). Between 1929 and 1932, worldwide gross domestic product (GDP) fell by an estimated 15%. By comparison, worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession. Some economies started to recover by the mid-1930s. However, in many countries the negative effects of the Great Depression lasted until the beginning of World War II.
Great Recession in the United States
The Great Recession in the United States was a severe financial crisis combined with a deep recession. While the recession officially lasted from December 2007 to June 2009, it took several years for the economy to recover to pre-crisis levels of employment and output. This slow recovery was due in part to households and financial institutions paying off debts accumulated in the years preceding the crisis along with restrained government spending following initial stimulus efforts. It followed the bursting of the housing bubble, the housing market correction and subprime mortgage crisis.
Economic history of the United States
The Great Recession was a sharp decline in the United States' economy. In 2008, a series of related economic disasters hit the American and European financial systems. The bursting of a worldwide bubble in housing set the recession in motion. The end of housing bubbles in California, Florida and Arizona led to the collapse of housing prices and the shrinkage of construction sector. Millions of mortgages (averaging about $200,000 each) had been bundled into securities called collateralized debt obligations that were resold worldwide. Many banks and hedge funds had borrowed hundreds of billions of dollars to buy these securities, which were now "toxic" because their value was unknown and no one wanted to buy them.
Fiscal policy of the United States
The Great Depression struck countries in the late 1920s and continued throughout the entire 1930's. It affected some countries more than others, and the effects in the US were detrimental. In 1933, 25 percent of all workers were unemployed in America. Many families starved or lost their homes. Some tried traveling to the West to find work, also to no avail.
History of the United States (1918–1945)
The economy eventually recovered from the low point of the winter of 1932–33, with sustained improvement until 1937, when the Recession of 1937 brought back 1934 levels of unemployment. There is a broad consensus among scholars that the New Deal policies did not lengthen and deepen the depression; only 5% of professional historians and 27% of professional economists believe it served to lengthen and deepen the Great Depression. Apart from the WPA and CCC, most New Deal spending programs, such as the PWA and AAA, operated through private firms.
Depression (economics)
The best-known depression was the Great Depression, which affected most national economies in the world throughout the 1930s. This depression is generally considered to have begun with the Wall Street Crash of 1929, and the crisis quickly spread to other national economies. Between 1929 and 1933, the gross national product of the United States decreased by 33% while the rate of unemployment increased to 25% (with industrial unemployment alone rising to approximately 35% – U.S. employment was still over 25% agricultural).
Reading Railroad Massacre
The Long Depression, sparked in the United States by the Panic of 1873, had extensive implications for US industry, closing more than a hundred railroads in the first year and cutting construction of new rail lines from of track in 1872 to in 1875. Approximately 18,000 businesses failed between 1873 and 1875, production in iron and steel dropped as much as 45 percent, and a million or more lost their jobs. In 1876, 76 railroad companies went bankrupt or entered receivership in the US alone, and the economic impacts rippled through many economic sectors throughout the industrialized world.
Great Depression in the United States
The Depression caused major political changes in America. Three years into the depression, President Herbert Hoover, widely shamed for not doing enough to combat the crisis, lost the election of 1932 to Franklin Delano Roosevelt by an embarrassingly wide margin. Roosevelt's economic recovery plan, the New Deal, instituted unprecedented programs for relief, recovery and reform, and brought about a major realignment of American politics.
History of banking in the United States
The late-2000s financial crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It was triggered by a liquidity shortfall in the United States banking system and has resulted in the collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market has also suffered, resulting in numerousevictions, foreclosures and prolonged vacancies. It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of U.S. dollars, and a significant decline in economic activity, leading to a severe global economic recession in 2008.
Great Depression
When the United States entered into the war in 1941, it finally eliminated the last effects from the Great Depression and brought the U.S. unemployment rate down below 10%. In the US, massive war spending doubled economic growth rates, either masking the effects of the Depression or essentially ending the Depression. Businessmen ignored the mounting national debt and heavy new taxes, redoubling their efforts for greater output to take advantage of generous government contracts.
History of taxation in the United States
During the outbreak of the Great Depression in 1930, Congress raised tariffs via the Smoot-Hawley Tariff Act on over 20,000 imported goods to record levels, and, in the opinion of most economists, worsened the Great Depression by causing other countries to reciprocate thereby plunging American imports and exports by more than half.
Financial contagion
One of the biggest worldwide crises was the stock market crash on Wall Street in October 1929. The failure from 1929–33 was foreshadowed by collapses in commodity prices in multiple emerging nations. The stock market boom in New York by 1928 choked off U.S. capital flows to central Europe and Latin America and precipitated currency crises in a number of countries (Australia, Argentina, Uruguay, and Brazil) and early in 1929. The Wall Street crash caused stock market scares globally. This is known as the Great Depression. The U.S. crisis in 1929 turned into the Great Depression by 1930 and 1931 because the Federal Reserve was unsuccessful at relieving multiple banking panics. The resultant collapse in prices and output worldwide forced sovereign borrowers to cut back on servicing their debts and then to default, precipitating a collapse of foreign lending in 1931.
African-American teachers
The Great Depression in the 1930s had a dramatic economic impact among Southern Black Americans. This resulted in the degradation of segregated Black schools. African Americans were deteriorating economically and pled for integration, in hopes of making more resources available. The legal desegregation of schools in the U.S. by federal enforcement of a series of Supreme Court decisions following "Brown v. Board of Education" in 1954. Desegregation resulted in the closure of Black schools and the loss of most jobs for African-American teachers. Whites didn't want their children taught by Black teachers. The African-American communities lost their leaders and role models. It created a distrust in schools from the Black community.
Wealth inequality in the United States
Pioneering work by Simon Kuznets using income tax records and his own well-researched estimates of national income showed a reduction of about 10% in the portion of national income going to the top 10%, a reduction from about 45–50% in 1913 to about 30–35% in 1948. This period spans both The Great Depression and World War II, events with significant economic consequences. This is called the Great Compression.
Great Depression in the United States
Examining the causes of the Great Depression raises multiple issues: what factors set off the first downturn in 1929; what structural weaknesses and specific events turned it into a major depression; how the downturn spread from country to country; and why the economic recovery was so prolonged.
1930s
After the Wall Street Crash of 1929, the largest stock market crash in American history, most of the decade was consumed by an economic downfall called the Great Depression that had a traumatic effect worldwide, leading to widespread unemployment and poverty, especially in the United States, an economic superpower, and Germany, who had to deal with the reparations regarding World War I. The Dust Bowl (which gives the nickname the Dirty Thirties) in the United States further emphasised the scarcity of wealth. Herbert Hoover worsened the situation with his failed attempt to balance the budget by raising taxes. Franklin D. Roosevelt was elected, as a response, in 1933, and introduced the New Deal. The founding of the Civilian Conservation Corps (CCC) and the funding of numerous projects (e.g. the Hoover Dam) helped restore prosperity in the US.
Long Depression
It was most notable in Western Europe and North America, at least in part because reliable data from the period is most readily available in those parts of the world. The United Kingdom is often considered to have been the hardest hit; during this period it lost some of its large industrial lead over the economies of Continental Europe. While it was occurring, the view was prominent that the economy of the United Kingdom had been in continuous depression from 1873 to as late as 1896 and some texts refer to the period as the Great Depression of 1873–1896.
Great Depression
Between 1933 and 1939, federal expenditure tripled, and Roosevelt's critics charged that he was turning America into a socialist state. The Great Depression was a main factor in the implementation of social democracy and planned economies in European countries after World War II (see Marshall Plan). Keynesianism generally remained the most influential economic school in the United States and in parts of Europe until the periods between the 1970s and the 1980s, when Milton Friedman and other neoliberal economists formulated and propagated the newly created theories of neoliberalism and incorporated them into the Chicago School of Economics as an alternative approach to the study of economics. Neoliberalism went on to challenge the dominance of the Keynesian school of Economics in the mainstream academia and policy-making in the United States, having reached its peak in popularity in the election of the presidency of Ronald Reagan in the United States, and Margaret Thatcher in the United Kingdom.
Great Depression
The Great Depression hit Germany hard. The impact of the Wall Street Crash forced American banks to end the new loans that had been funding the repayments under the Dawes Plan and the Young Plan. The financial crisis escalated out of control and mid-1931, starting with the collapse of the Credit Anstalt in Vienna in May. This put heavy pressure on Germany, which was already in political turmoil with the rise in violence of Nazi and communist movements, as well as with investor nervousness at harsh government financial policies. Investors withdrew their short-term money from Germany, as confidence spiraled downward. The Reichsbank lost 150 million marks in the first week of June, 540 million in the second, and 150 million in two days, June 19–20. Collapse was at hand. U.S. President Herbert Hoover called for a moratorium on Payment of war reparations. This angered Paris, which depended on a steady flow of German payments, but it slowed the crisis down and the moratorium, was agreed to in July 1931. An international conference in London later in July produced no agreements but on August 19 a standstill agreement froze Germany's foreign liabilities for six months. Germany received emergency funding from private banks in New York as well as the Bank of International Settlements and the Bank of England. The funding only slowed the process. Industrial failures began in Germany, a major bank closed in July and a two-day holiday for all German banks was declared. Business failures became more frequent in July, and spread to Romania and Hungary.
History of the United Kingdom
The Great Depression originated in the United States in late 1929 and quickly spread to the world. Britain had never experienced the boom that had characterized the US, Germany, Canada and Australia in the 1920s, so its bust appeared less severe. Britain's world trade fell in half (1929–33), the output of heavy industry fell by a third, employment profits plunged in nearly all sectors. At the depth in summer 1932, registered unemployed numbered 3.5 million, and many more had only part-time employment. Experts tried to remain optimistic. John Maynard Keynes, who had not predicted the slump, said, "'There will be no serious direct consequences in London. We find the look ahead decidedly encouraging."
Great Depression in the United States
Most economies started to recover by 1933–34. However, in the U.S. and some others the negative economic impact often lasted until the beginning of World War II, when war industries stimulated recovery.
Great Depression in the United States
There is little agreement on what caused the Great Depression, and the topic has become highly politicized. At the time the great majority of economists around the world recommended the "orthodox" solution of cutting government spending and raising taxes. However, British economist John Maynard Keynes advocated large-scale government deficit spending to make up for the failure of private investment. No major nation adopted his policies in the 1930s.The stock market crash in the 1929 not only affected the business community and the public's economic confidence, but also it led to the banking system soon after the turmoil. The boom of the US economy in the 1920s was based on high indebtedness, and the rupture of the debt chain caused by the collapse of the bank had produced widespread and far-reaching adverse effects. It is precisely because of the shaky banking system, the United States was using monetary policy to save the economy that had been severely constrained. The American economist Kindleberger of long-term studying of the Great Depression pointed out that in the 1929, before and after the collapse of the stock market, the Fed lowered interest rates, tried to expand the money supply and eased the financial market tensions for several times, however they were not successful, the fundamental reason was that the relationship between various credit institutions and the community was in a drastic adjustment process, the normal supply channels for money supply were blocked. Later, some economists argued that the Fed should do a large-scale opening market business at that time, but the essence of the statement was that the US government should be quick to implement measures to expand fiscal spending and fiscal deficits, whereas, the essence of this argument was that the US government should be promptly implemented to expand the fiscal spending and the fiscal deficits measures.
David Ames Wells
"Recent Economic Changes and Their Effect on the Production and Distribution of Wealth and Well-Being of Society" (1891) is a frequently cited reference for U.S. economic history of the late 19th century and is available in modern reprints. It is an account of the dramatic changes in the world economy transitioning into the Second Industrial Revolution in which Wells documented many of the changes in trade, such as triple expansion steam shipping, railroads, the effect of the international telegraph network and the opening of the Suez Canal. Wells also discussed the Long Depression and many causes of the great advances in productivity of the preceding 20 years. Wells noted that many of the government inquires on the “depression of prices” (deflation) found various reasons such as the scarcity of gold and silver. Wells showed that the U.S money supply, especially the amount of gold and silver, actually rose significantly during the deflation. Wells pointed out that deflation only lowered the cost of goods that benefited from improved methods of manufacturing and transportation. Goods produced by craftsmen did not decrease in value, nor did many services, and the cost of labor actually increased. Also, deflation did not occur in countries that did not have modern manufacturing, transportation and communications.
History of Minnesota
The Great Depression had several effects on Minnesota, with layoffs on the Iron Range and a drought in the Great Plains from 1931 through 1936. While the Depression had several causes, one most relevant to Minnesota was that United States businesses in the 1920s had improved their efficiency through standardizing production methods and eliminating waste. Business owners were reaping the benefits of this increase in productivity, but they were not sharing it with their employees because of the weakness of organized labor, nor were they sharing it with the public in the form of lowered prices. Instead, the windfall went to stockholders. The eventual result was that consumers could no longer afford the goods that factories were producing.
New Deal
Lowell E. Gallaway and Richard K. Vedder argue on the basis of Austrian School of economics theories that the Great Depression was caused by wages being too high which they say had caused a loss of depositor confidence which caused the bank runs. They further conclude that the "Great Depression was very significantly prolonged in both its duration and its magnitude by the impact of New Deal programs". They suggest that without Social Security, work relief, unemployment insurance, mandatory minimum wages and without special government-granted privileges for labor unions, business would have hired more workers and the unemployment rate during the New Deal years would have been 6.7% instead of 17.2%. Amity Shlaes wrote that "from 1929 to 1940, from Hoover to Roosevelt, government intervention helped to make the Depression Great". Shlaes said that the NRA was misguided because it used price setting to fix monetary problems. According to Shlaes, Roosevelt's experimentation frightened business into inaction and prevented recovery. Eric Rauchway showed that Shlaes tried to diminish the economic growth by referring to the unrepresentative Dow Jones Industrial Average. He continued that usually a historian or economist would have referred to the gross domestic product, which according to the Historical Statistics of the United States grew impressively by 9% annually during Roosevelt's first term and by 11% annually after the short recession of 1937–1938.
Modern history
The depression had devastating effects in virtually every country, rich or poor. International trade plunged by half to two-thirds, as did personal income, tax revenue, prices and profits. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by roughly 60 percent. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries suffered the most.
The Great Depression ended at different times in different countries with the effect lasting into the next era. America's Great Depression ended in 1941 with America's entry into World War II. The majority of countries set up relief programs, and most underwent some sort of political upheaval, pushing them to the left or right. In some world states, the desperate citizens turned toward nationalist demagogues—the most infamous being Adolf Hitler—setting the stage for the next era of war. The convulsion brought on by the worldwide depression resulted in the rise of Nazism. In Asia, Japan became an ever more assertive power, especially with regards to China.
American Empire: The Center Cannot Hold
When the Great Depression occurs, Burton Mitchel III is blamed in the Confederacy. In the U.S. which came out of the 1920s with a booming economy and with the Canadian revolt having been crushed in 1925, newly elected President Hosea Blackford takes the heat, with shantytowns and slums being named "Blackfordburghs". Millions lose their jobs, and in Utah, (under military occupation since 1916), a fanatical Mormon sniper guns down Governor-General John J. Pershing. When Japan and the U.S. go to war in 1932 after Japan is caught smuggling weapons to Pacific Canada (the occupied Canadian province of British Columbia) by the U.S.S. "Remembrance", and Japanese bombers attack Los Angeles. In the 1932 presidential election, President Blackford is defeated by Calvin Coolidge and his running mate Herbert Hoover in a landslide. However Coolidge is never able to take office. On January 5, 1933, he dies of a heart attack about a month before he could take office. (In real life, Former President Coolidge died of a heart attack on the same date.) Vice President-Elect Hoover assumes the presidency, practicing Coolidge's campaign policy of government non-intervention in the economy.
New Deal
Worldwide, the Great Depression had the most profound impact in the German Reich and the United States. In both countries the pressure to reform and the perception of the economic crisis were strikingly similar. When Hitler came to power he was faced with exactly the same task that faced Roosevelt, overcoming mass unemployment and the global Depression. The political responses to the crises were essentially different: while American democracy remained strong, Germany replaced democracy with fascism, a Nazi dictatorship.
Herbert Hoover
Hoover pursued many policies in an attempt to pull the country out of depression, while attempting to restrain the federal government from becoming directly involved in commercial affairs. In the days following Black Tuesday, Hoover gathered business and labor leaders, asking them to avoid wage cuts and work stoppages while the country faced what he believed would be a short recession similar to the Depression of 1920–21. Some economists, such as Lee Ohanian, point to the resulting wage rigidity as a key cause of the severity of the Great Depression.
Joseph Stiglitz
Contrary to most economists historians, who argue that tariffs have played only a minor role or not at all in the Great Depression, Stiglitz thinks that the United States should not protect its economy because tariffs contributed to the Great Depression: "Following that, U.S. exports fell by some 50 percent—contributing to our Great Depression".
Long Depression
The sectors which experienced the most severe declines in output were manufacturing, construction, and railroads. The railroads had been a tremendous engine of growth in the years before the crisis, yielding a 50% increase in railroad mileage from 1867 to 1873. After absorbing as much as 20% of US capital investment in the years preceding the crash, this expansion came to a dramatic end in 1873; between 1873 and 1878, the total amount of railroad mileage in the United States barely increased at all.
Interwar period
The Great Depression had devastating effects in countries both rich and poor. Personal income, tax revenue, profits, and prices dropped, while international trade plunged by more than 50%. Unemployment in the U.S. rose to 25% and in some countries rose as high as 33%. Prices fell sharply, especially for mining and agricultural commodities. Business profits fell sharply as well, with a sharp reduction in new business starts.
Causes of the Great Depression
The debtor nations put strong pressure on the U.S. in the 1920s to forgive the debts, or at least reduce them. The American government refused. Instead, U.S. banks began making large loans to the nations of Europe. Thus, debts (and reparations) were being paid only by augmenting old debts and piling up new ones. In the late 1920s, and particularly after the American economy began to weaken after 1929, the European nations found it much more difficult to borrow money from the U.S. At the same time, high U.S. tariffs were making it much more difficult for them to sell their goods in U.S. markets. Without any source of revenue from foreign exchange to repay their loans, they began to default.
History of South America
The Great Depression posed a challenge to the region. The collapse of the world economy meant that the demand for raw materials drastically declined, undermining many of the economies of South America. Intellectuals and government leaders in South America turned their backs on the older economic policies and turned toward import substitution industrialization. The goal was to create self-sufficient economies, which would have their own industrial sectors and large middle classes and which would be immune to the ups and downs of the global economy. Despite the potential threats to United States commercial interests, the Roosevelt administration (1933–1945) understood that the United States could not wholly oppose import substitution. Roosevelt implemented a good neighbor policy and allowed the nationalization of some American companies in South America. The Second World War also brought the United States and most Latin American nations together.
Causes of the Great Depression
Protectionism, such as the American Smoot–Hawley Tariff Act, is often indicated as a cause of the Great Depression, with countries enacting protectionist policies yielding a beggar thy neighbor result. The Smoot–Hawley Tariff Act was especially harmful to agriculture because it caused farmers to default on their loans. This event may have worsened or even caused the ensuing bank runs in the Midwest and West that caused the collapse of the banking system. A petition signed by over 1,000 economists was presented to the U.S. government warning that the Smoot-Hawley Tariff Act would bring disastrous economic repercussions; however, this did not stop the act from being signed into law.
Economy of North America
The Great Depression spurred increased government intervention in the economy in North America. The United States introduced unemployment insurance, a minimum wage and standardised working hours under the New Deal. Canada introduced similar measures. Mexico nationalised some key industries during the Great Depression, with the railroads nationalised by 1937 and the oil industry nationalised in 1938.
United States
The 2008–2012 global recession significantly affected the United States, with output still below potential according to the Congressional Budget Office. It brought high unemployment (which has been decreasing but remains above pre-recession levels), along with low consumer confidence, the continuing decline in home values and increase in foreclosures and personal bankruptcies, an escalating federal debt crisis, inflation, and rising petroleum and food prices.
History of conservatism in the United States
The Great Depression which followed the 1929 stock market collapse led to price deflation, massive unemployment, falling farm incomes, investment losses, bank failures, business bankruptcies and reduced government revenues. Herbert Hoover's protectionist economic policies failed to halt the depression, and in the 1932 presidential election, Democratic Franklin D. Roosevelt won a landslide victory.
Latinas and World War II
In the aftermath of World War I, countries of Europe were left in debt from the war, inflation started to rise, and the United States suffered from a Great Depression. The political and social changes around the world proved volatile. The United States opposed the fascist regimes that were gaining ground around the world, but it was not until December 1941 that the U.S. entered into the War after the December 7 attacks on Pearl Harbor incited public support and Congress declared war on Japan on December 8, 1941. This began U.S. involvement in World War II and set the stage for Latina involvement as well.
Economic collapse
While arguably not a true economic collapse, the decade of the 1930s witnessed the most severe worldwide economic contraction since the start of the Industrial Revolution. In the US, the Depression began in the summer of 1929, soon followed by the stock market crash of October 1929. American stock prices continued to decline in fits and starts until they hit bottom in July 1932. In the first quarter of 1933, the banking system broke down: asset prices had collapsed, bank lending had largely ceased, a quarter of the American work force was unemployed, and real GDP per capita in 1933 was 29% below its 1929 value. The ensuing rapid recovery was interrupted by a major recession in 1937-38. The USA fully recovered by 1941, the eve of its entry in World War II, which gave rise to a boom as dramatic as the Depression that preceded it.
The Living New Deal
When President Franklin D. Roosevelt took office in 1933, America was in the depths of the Great Depression. The stock market crash of 1929 led the implosion and the downturn continued for over three years as thousands of banks and businesses failed and millions of people lost their life savings, farms, and homes. At the nadir, one-quarter of the U.S. workforce was unemployed and national output had fallen by one-third.
Long Depression
The United Kingdom, which had previously experienced crises every decade since the 1820s, was initially less affected by this financial crisis, even though the Bank of England kept interest rates as high as 9 percent in the 1870s.
Scranton general strike
The Long Depression, sparked in the US by the Panic of 1873, had far reaching implications for US industry, shuttering more than a hundred railroads in the first year and cutting construction of new rail lines from 7,500 miles of track in 1872 to 1,600 miles in 1875. Approximately 18,000 businesses failed between 1873, and in 1875, production in iron and steel alone dropped as much as 45%, and a million or more lost their jobs. In 1876 alone, 76 railroad companies went bankrupt or entered receivership.
Lost Decade (Japan)
After the Great Recession of 2007–2009, many Western governments and commentators have referenced the Lost Decade as a distinct economic possibility for stagnating developed nations. On February 9, 2009, in warning of the dire consequences facing the United States economy after its housing bubble, U.S. President Barack Obama cited the "lost decade" as a prospect the American economy faced. And in 2010, Federal Reserve Bank of St. Louis President James Bullard warned that the United States was in danger of becoming "enmeshed in a Japanese-style deflationary outcome within the next several years."
Great Depression in the United States
The Wall Street Crash of 1929 is often cited as the beginning of the Great Depression. It began on October 24, 1929, and was the most devastating stock market crash in the history of the United States. Much of the stock market crash can be attributed to exuberance and false expectations. In the years leading up to 1929, the rising stock market prices had created vast sums of wealth for those invested, in turn encouraging borrowing to further buy more stock. However, on October 24 (Black Thursday), share prices began to fall and panic selling caused prices to fall sharply. On October 29 (Black Tuesday), share prices fell by $14 billion in a single day, more than $30 billion in the week. The value that evaporated that week was 10x more than the entire federal budget and more than all of what the U.S. spent on World War I. By 1930 the value of shares had fallen by 90%.
Great Recession
The Great Recession was a period of general economic decline observed in world markets during the late 2000s and early 2010s. The scale and timing of the recession varied from country to country. The International Monetary Fund concluded that the overall impact was the most severe since the Great Depression in the 1930s. The Great Recession stemmed from the collapse of the United States real-estate market, in relation to the financial crisis of 2007 to 2008 and U.S. subprime mortgage crisis of 2007 to 2009, though policies of other nations contributed also. According to the National Bureau of Economic Research (the official arbiter of U.S. recessions), the recession in the United States began in December 2007 and ended in June 2009, thus extending over 19 months. The Great Recession resulted in the scarcity of valuable assets in the market economy and the collapse of the financial sector (banks) in the world economy. Some banks were bailed out by the Federal government of the United States.
Long Depression
The Russian experience was similar to the US experience - three separate recessions, concentrated in manufacturing, occurred in the period (1874–1877, 1881–1886, and 1891–1892), separated by periods of recovery.
Great Depression in the United States
Whether this caused the Great Depression is still heavily debated due to many other attributing factors. However, it is evident that the banking system suffered massive reductions across the country due to the lack of consumer confidence. As withdraw requests would exceed cash availability banks began conducting steed discount sales such as fire sales and short sales. Due to the inability to immediately determine current value worth these fire sales and short sales would result in massive losses when recuperating any possible revenue for outstanding and defaulted loans. This would allow healthy banks to take advantage of the struggling units forcing additional losses resulting in banks not being able to deliver on depositor demands and creating a failing cycle that would become wide spread. Investment would continue to stay low through the next half decade as the private sector would horde savings due to uncertainty of the future. The federal government would run additional policy changes such as the Check tax, monetary restrictions (including reduction of money supply by burning), High Wage Policy, and The New Deal through the Hoover and Roosevelt administration.
Long Depression
The period preceding the depression was dominated by several major military conflicts and a period of economic expansion. In Europe, the end of the Franco-Prussian War yielded a new political order in Germany, and the £200 million reparations imposed on France led to an inflationary investment boom in Germany and Central Europe. New technologies in industry such as the Bessemer converter were being rapidly applied; railroads were booming. In the United States, the end of the Civil War and a brief post-war recession (1865–1867) gave way to an investment boom, focused especially on railroads on public lands in the Western United States - an expansion funded greatly by foreign investors.
Great Depression in the United States
At the beginning of 1933, the last few weeks of Hoover's term, the American financial system was paralyzed. The Great Depression was extended by the interventionist policy for four years. Bank crisis caused the serious deflationary pressures. For this phenomenon, Hoover still wanted to stop it. In fact, the worst period of 1932 – the Great Depression had passed, but the recovery was slow and weak. During the financial crisis of 1933 that culminated in the banking holiday in March 1933, a lot of gold flowed out from the Fed, some of them flow out to individuals and companies in the United States. This domestic loss occurred because individuals and businesses like to deposit metal gold into bank deposits or banknotes, some gold flows to foreign countries, and this external loss occurred because foreign investors were worried about the depreciation of the dollar. Roosevelt understands that the traditional political and financial policy cannot save the United States from the "disaster years", he pursued the "New Deal" to attempt to make up for the United States by administrative means. In the spring and summer of 1933, the Roosevelt government suspended the gold standard. The Emergency Banking Act gave the President the power to control international and domestic gold sports. It also gave the treasury secretary the power to surrender of gold coins and certificates. On April 20, President Roosevelt issued a formal announcement of the moratorium on the gold standard. The announcement prohibited gold exports, and prohibited financial institutions from converting money and deposits into gold coins and ingots. The action prevented the gold outflow. Soon, the Roosevelt government weakened the connection with gold once again. Thomas amendment to the Agricultural Relief Act to the gave to the President power to reduce the dollar's gold content by as much as 50%. The President Roosevelt also used the silver standard instead of gold to exchange dollars, it determined by the price of the bank. In April 1933, Roosevelt decided to abolish the gold standard through the New Deal. He abandoned this traditional monetary policy is mainly due to the big crisis to the original monetary policy failure. And the purpose of his action is to prohibit all exports of gold except for foreign countries, so that the United States can maintain an equal monetary base with the vast majority of countries. The Hoover government stubbornly insisted on using the "sound money" policy who against deficit spending and state relief that only make the economic crisis worsen. Because of this situation Roosevelt forced the implementation of inflation, and used the federal deficit spending to promote employment to enforce relief. The abandon of the gold standard made the Wall Street stock prices quickly increased, Wall Street's stock trading was exceptionally active, with a total of 5 million shares delivered on a day, which is the most active day in the past six months.
Tariff
Milton Friedman held the opinion that the Smoot–Hawley tariff of 1930 did not cause the Great Depression, instead he blamed the lack of sufficient action on the part of the Federal Reserve. Douglas A. Irwin wrote: "most economists, both liberal and conservative, doubt that Smoot–Hawley played much of a role in the subsequent contraction".
Peter Temin, an economist at the Massachusetts Institute of Technology, explained that a tariff is an expansionary policy, like a devaluation as it diverts demand from foreign to home producers. He noted that exports were 7 percent of GNP in 1929, they fell by 1.5 percent of 1929 GNP in the next two years and the fall was offset by the increase in domestic demand from tariff. He concluded that contrary the popular argument, contractionary effect of the tariff was small.
William Bernstein wrote: "Between 1929 and 1932, real GDP fell 17 percent worldwide, and by 26 percent in the United States, but most economic historians now believe that only a miniscule part of that huge loss of both world GDP and the United States’ GDP can be ascribed to the tariff wars. .. At the time of Smoot-Hawley's passage, trade volume accounted for only about 9 percent of world economic output. Had all international trade been eliminated, and had no domestic use for the previously exported goods been found, world GDP would have fallen by the same amount — 9 percent. Between 1930 and 1933, worldwide trade volume fell off by one-third to one-half. Depending on how the falloff is measured, this computes to 3 to 5 percent of world GDP, and these losses were partially made up by more expensive domestic goods. Thus, the damage done could not possibly have exceeded 1 or 2 percent of world GDP — nowhere near the 17 percent falloff seen during the Great Depression... The inescapable conclusion: contrary to public perception, Smoot-Hawley did not cause, or even significantly deepen, the Great Depression.
Long Depression
The dramatic shift in prices mauled nominal wages - in the United States, nominal wages declined by one-quarter during the 1870s, and as much as one-half in some places, such as Pennsylvania. Although real wages had enjoyed robust growth in the aftermath of the American Civil War, increasing by nearly a quarter between 1865 and 1873, they stagnated until the 1880s, posting no real growth, before resuming their robust rate of expansion in the later 1880s. The collapse of cotton prices devastated the already war-ravaged economy of the southern United States. Although farm prices fell dramatically, American agriculture continued to expand production.
History of Western civilization
Europe was relatively unstable following World War I. Although many prospered in the 1920s, Germany was in a deep financial and economic crisis. Also, France and Britain owed the U.S. a great deal of money. When the United States went into Depression, so did Europe. There were perhaps 30 million people around the world unemployed following the Depression. Many governments helped to alleviate the suffering of their citizens and by 1937 the economy had improved although the lingering effects of the Depression remained. Also, the Depression led to the spread of radical left-wing and right-wing ideologies, like Communism and Fascism.
Great Depression in the United States
The U.S. Government's commitment to the gold standard prevented it from engaging in expansionary monetary policy. High interest rates needed to be maintained in order to attract international investors who bought foreign assets with gold. However, the high interest also inhibited domestic business borrowing.
The U.S. interest rates were also affected by France's decision to raise their interest rates to attract gold to their vaults. In theory, the U.S. would have two potential responses to that: Allow the exchange rate to adjust, or increase their own interest rates to maintain the gold standard. At the time, the U.S. was pegged to the gold standard. Therefore, Americans converted their dollars into francs to buy more French assets, the demand for the U.S. dollar fell, and the exchange rate increased. One of the only things the U.S. could do to get back into equilibrium was increase interest rates.
Great Depression in the United States
In 1929, the Great Depression began, the asset bubble burst, and the unemployment rate rose. The following year, though most people thought that there was nothing worth worrying about, Hoover took decisive action on issues such as employment, construction, public construction, and agriculture, which helped restore public confidence. The unemployed population rose, although it remained less than 9%.
Bank run
Banking panics began in the Upper-South in November 1930, one year after the stock market crash, triggered by the collapse of a string of banks in Tennessee and Kentucky, which brought down their correspondent networks. In December, New York City experienced massive bank runs that were contained to the many branches of a single bank. Philadelphia was hit a week later by bank runs that affected several banks, but were successfully contained by quick action by the leading city banks and the Federal Reserve Bank. Withdrawals became worse after financial conglomerates in New York and Los Angeles failed in prominently-covered scandals. Much of the US Depression's economic damage was caused directly by bank runs, though Canada had no bank runs during this same era due to different banking regulations.
Milton Friedman and Anna Schwartz argued that steady withdrawals from banks by nervous depositors ("hoarding") were inspired by news of the fall 1930 bank runs and forced banks to liquidate loans, which directly caused a decrease in the money supply, shrinking the economy. Bank runs continued to plague the United States for the next several years. Citywide runs hit Boston (Dec. 1931), Chicago (June 1931 and June 1932), Toledo (June 1931), and St. Louis (Jan. 1933), among others. Institutions put into place during the Depression have prevented runs on U.S. commercial banks since the 1930s, even under conditions such as the U.S. savings and loan crisis of the 1980s and 1990s.
History of the United States (1964–1980)
Inflationary pressures led to key shifts in economic policies. Following the Great Depression of the 1930s, recessions—periods of slow economic growth and high unemployment—were viewed as the greatest of economic threats, which could be counteracted by heavy government spending or cutting taxes so that consumers would spend more. In the 1970s, major price increases, particularly for energy, created a strong fear of inflation; as a result, government leaders concentrated more on controlling inflation than on combating recession by limiting spending, resisting tax cuts, and reining in growth in the money supply. The erratic economic programs of the Nixon administration were indicative of a broader national confusion about the prospects for future American prosperity. Nixon and his advisers had a poor understanding of the complexities of the global economy (Henry Kissinger once confessed that economics were mostly a blank spot to him) and all of them belonged to the generation that came of age during the New Deal era and believed strongly in government intervention in the economy. They preferred quick, dirty, short-term fixes to complex economy issues. These underlying problems set the stage for conservative reaction, a more aggressive foreign policy, and a retreat from welfare-based solutions for minorities and the poor that would characterize the subsequent decades.
History of the United States Congress
On October 29, 1929, a day known in history as Black Tuesday, the New York Stock Exchange experienced a significant crash and the United States, as well as most of the world, would enter a major recession. In response, President Herbert Hoover and the Republican Congress passed the Smoot Hawley Tariff Act. However, it has been recognized that this act only made economic condition far worse. The 1930 midterm election saw the Republicans barely maintain control of the US House of Representatives and US Senate. Shortly after the 1930 midterm election, however, special elections were held to replace 19 House of Representative-elects who died, and Democrats would gain a four-seat majority in the US House of Representatives as a result of the outcome of these elections. In the 1932 US Senate elections, the Democrats easily regained control over the US Senate once again; this 1932 election also saw Franklin Roosevelt get elected US President as well, and Roosevelt could now begin his historic New Deal policies through the Democrat-dominated US Congress, and could bring the US out of the Great Depression for four years.
Long Depression
The Long Depression was a worldwide price and economic recession, beginning in 1873 and running either through the spring of 1879, or 1896, depending on the metrics used. It was the most severe in Europe and the United States, which had been experiencing strong economic growth fueled by the Second Industrial Revolution in the decade following the American Civil War. The episode was labeled the "Great Depression" at the time, and it held that designation until the Great Depression of the 1930s. Though a period of general deflation and a general contraction, it did not have the severe economic retrogression of the Great Depression.
Early 1990s recession in the United States
The United States entered recession in 1990, which lasted 8 months through March 1991. Although the recession was mild relative to other post-war recessions, it was characterized by a sluggish employment recovery, most commonly referred to as a jobless recovery. Unemployment continued to rise through June 1992, even though economic growth had returned the previous year.
Tax protester history in the United States
The Great Depression made tax delinquency widespread during the presidency of Franklin D. Roosevelt, when income taxes increased dramatically to pay for New Deal programs and U.S. involvement in World War II.
Economic history of the United States
Following the stock market crash, the worldwide economy plunged into the Great Depression. The U.S. money supply began to contract by one-third. The protectionist Smoot–Hawley Tariff Act incited retaliation by Canada, Britain, Germany and other trading partners. Congress, in 1932, worried about the rapidly growing deficit and national debt, and raised income tax rates. Economists generally agree that these measures deepened an already serious crisis. By 1932, the unemployment rate was 25%. Conditions were worse in heavy industry, lumbering, export agriculture (cotton, wheat, tobacco), and mining. Conditions were not quite as bad in white collar sectors and in light manufacturing.
Depression of 1882–85
The Depression of 1882–85 or Recession of 1882–85 was an economic contraction in the United States that lasted from March 1882 to May 1885, according to the National Bureau of Economic Research. At 38 months in length this is the third-longest recession in the NBER's chronology of business cycles from 1854 to present. Only the Great Depression of 1929-1941 and the Long Depression of 1873–79 were longer.
Effects of the Great Recession
The crisis affected all countries in some ways, but certain countries were vastly affected more than others. By measuring currency devaluation, equity market decline, and the rise in sovereign bond spreads, a picture of financial devastation emerges. Since these three indicators show financial weakness, taken together, they capture the impact of the crisis. The Carnegie Endowment for International Peace reports in its International Economics Bulletin that Ukraine, as well as Argentina and Jamaica, are the countries most deeply affected by the crisis. Other severely affected countries are Ireland, Russia, Mexico, Hungary, the Baltic states, United States and United Kingdom. By contrast, China, Japan, Brazil, India, Iran, Peru and Australia are "among the least affected."
Great Depression in the United States
Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by approximately 60%. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as grain farming, mining and logging, as well as construction, suffered the most.
Pittsburgh railroad strike of 1877
The Long Depression, sparked in the United States by the Panic of 1873, had far-reaching implications for US industry, closing more than a hundred railroads in the first year and cutting construction of new rail lines from of track in 1872, to in 1875.
Looking Backward
The decades of the 1870s and the 1880s were marked by economic and social turmoil, including the Long Depression of 1873–1879, a series of recessions during the 1880s, the rise of organized labor and strikes, and the 1886 Haymarket affair and its controversial aftermath. Moreover, American capitalism's tendency towards concentration into ever larger and less competitive forms—monopolies, oligopolies, and trusts—began to make itself evident, while emigration from Europe expanded the labor pool and caused wages to stagnate. The time was ripe for new ideas about economic development which might ameliorate the current social disorder.
Causes of the Great Depression
The United States government and the Federal Reserve did not do that during the 1929‑32 slide into the Great Depression The existence of "liquidationism" played a key part in motivating public policy decisions not to fight the gathering Great Depression. An increasingly common view among economic historians is that the adherence of some Federal Reserve policymakers to the liquidationist thesis led to disastrous consequences. Regarding the policies of President Hoover, economists Barry Eichengreen and J. Bradford DeLong point out that the Hoover administration's fiscal policy was guided by liquidationist economists and policy makers, as Hoover tried to keep the federal budget balanced until 1932, when Hoover lost confidence in his Secretary of the Treasury Andrew Mellon and replaced him. Hoover wrote in his memoirs he did not side with the liquidationists, but took the side of those in his cabinet with "economic responsibility", his Secretary of Commerce Robert P. Lamont and Secretary of Agriculture Arthur M. Hyde, who advised the President to "use the powers of government to cushion the situation". But at the same time he kept Andrew Mellon as Secretary of the Treasury until February 1932. It was during 1932 that Hoover began to support more aggressive measures to combat the Depression. In his memoirs, President Hoover wrote bitterly about members of his Cabinet who had advised inaction during the downslide into the Great Depression:
Great Depression in the United States
By 1936, all the main economic indicators had regained the levels of the late 1920s, except for unemployment, which remained high. In 1937, the American economy unexpectedly fell, lasting through most of 1938. Production declined sharply, as did profits and employment. Unemployment jumped from 14.3% in 1937 to 19.0% in 1938. A contributing factor to the Recession of 1937 was a tightening of monetary policy by the Federal Reserve. The Federal Reserve doubled reserve requirements between August 1936 and May 1937 leading to a contraction in the money supply.
Economy of the United States
The United States has been the world's largest national economy in terms of GDP since at least the 1920s. For many years following the Great Depression of the 1930s, when danger of recession appeared most serious, the government strengthened the economy by spending heavily itself or cutting taxes so that consumers would spend more, and by fostering rapid growth in the money supply, which also encouraged more spending. Ideas about the best tools for stabilizing the economy changed substantially between the 1930s and the 1980s. From the New Deal era that began in 1933, to the Great Society initiatives of the 1960s, national policy makers relied principally on fiscal policy to influence the economy.
During the world wars of the twentieth century, the United States fared better than the rest of the combatants because none of the First World War and relatively little of the Second World War was fought on American territory (and none on the then 48 states). Yet, even in the United States, the wars meant sacrifice. During the peak of Second World War activity, nearly 40 percent of U.S. GDP was devoted to war production. Decisions about large swaths of the economy were largely made for military purposes and nearly all relevant inputs were allocated to the war effort. Many goods were rationed, prices and wages controlled and many durable consumer goods were no longer produced. Large segments of the workforce were inducted into the military, paid half wages, and roughly half of those were sent into harm's way.
Great Depression
Many economists have argued that the sharp decline in international trade after 1930 helped to worsen the depression, especially for countries significantly dependent on foreign trade. In a 1995 survey of American economic historians, two-thirds agreed that the Smoot–Hawley Tariff Act at least worsened the Great Depression. Most historians and economists partly blame the American Smoot–Hawley Tariff Act (enacted June 17, 1930) for worsening the depression by seriously reducing international trade and causing retaliatory tariffs in other countries. While foreign trade was a small part of overall economic activity in the U.S. and was concentrated in a few businesses like farming, it was a much larger factor in many other countries. The average "ad valorem" rate of duties on dutiable imports for 1921–25 was 25.9% but under the new tariff it jumped to 50% during 1931–35. In dollar terms, American exports declined over the next four (4) years from about $5.2 billion in 1929 to $1.7 billion in 1933; so, not only did the physical volume of exports fall, but also the prices fell by about 1/3 as written. Hardest hit were farm commodities such as wheat, cotton, tobacco, and lumber.
San Francisco riot of 1877
From 1873 through the rest of the 1870s a severe economic crisis swept the United States of America known to history as the Long Depression. Economic contraction in the eastern United States proved the motivation for many to pull up stakes and try to reestablish themselves in the West coast mecca of California. Indeed, between the years 1873 and 1875 an estimated 150,000 workers made their way to the "Golden State," many of whom settled in the state's only metropolis, San Francisco.
Long Depression
Thousands of American businesses failed, defaulting on more than a billion dollars of debt. One in four laborers in New York were out of work in the winter of 1873–1874 and, nationally, a million became unemployed.
Causes of the Great Depression
The depression then affected all nations on an international scale. "The German mark collapsed when the chancellor put domestic politics ahead of sensible finance; the bank of England abandoned the gold standard after a subsequent speculative attack; and the U.S. Federal Reserve raised its discount rate dramatically in October 1931 to preserve the value of the dollar". The Federal Reserve drove the American economy into an even deeper depression.
United States Congress
The Great Depression ushered in President Franklin Roosevelt and strong control by Democrats and historic New Deal policies. Roosevelt's election in 1932 marked a shift in government power towards the executive branch. Numerous New Deal initiatives came from the White House rather than being initiated by Congress. The Democratic Party controlled both houses of Congress for many years. During this time, Republicans and conservative southern Democrats formed the Conservative Coalition. Democrats maintained control of Congress during World War II. Congress struggled with efficiency in the postwar era partly by reducing the number of standing congressional committees. Southern Democrats became a powerful force in many influential committees although political power alternated between Republicans and Democrats during these years. More complex issues required greater specialization and expertise, such as space flight and atomic energy policy. Senator Joseph McCarthy exploited the fear of communism and conducted televised hearings. In 1960, Democratic candidate John F. Kennedy narrowly won the presidency and power shifted again to the Democrats who dominated both houses of Congress until 1994.
Great Depression in the United Kingdom
The ensuing American economic collapse shook the world: World trade contracted, prices fell and governments faced financial crisis as the supply of American credit dried up. Many countries adopted an emergency response to the crisis by erecting trade barriers and tariffs, which worsened the crisis by further hindering global trade. The British Empire tried to hang together by lower tariffs among the members while raising them against the U.S. and others.
Great Recession in the United States
However, the Great Recession was different in kind from the all the recessions since the Great Depression, as it also involved a banking crisis and the de-leveraging (debt reduction) of highly indebted households. Research indicates recovery from financial crises can be protracted, with lengthy periods of high unemployment and substandard economic growth. Economist Carmen Reinhart stated in August 2011: "Debt de-leveraging [reduction] takes about seven years ... And in the decade following severe financial crises, you tend to grow by 1 to 1.5 percentage points less than in the decade before, because the decade before was fueled by a boom in private borrowing, and not all of that growth was real. The unemployment figures in advanced economies after falls are also very dark. Unemployment remains anchored about five percentage points above what it was in the decade before."
National Youth Administration
As the Great Depression continued to grip the American economy and inhibit the harnessing of American potential, unemployment and poverty spiraled to record highs. These debilitating years saw youth unemployment rise to 30% and the younger cohorts of the United States increasingly faced the devastation of not being able to afford education. Serving as the main catalyst for change and accelerator for government intervention, Eleanor Roosevelt advocated government involvement. In 1934 she notably declared that she frequently experienced "moments of real terror when [she thought] we might be losing this generation".
Halfway through the depression, Roosevelt had mixed opinions on the NYA and started leaning towards Congress to shut it down. "Its time we start thinking about the economy with war debt and the rise of liberals we must act now, as president I make the decision to give the NYA to congress to make sense of."
Farm Security Administration
The Great Depression began in August 1929, when the United States economy first went into an economic recession. Although the country spent two months with declining GDP, it was not until the Wall Street Crash in October 1929 that the effects of a declining economy were felt, and a major worldwide economic downturn ensued. The market crash marked the beginning of a decade of high unemployment, poverty, low profits, deflation, plunging farm incomes, and lost opportunities for economic growth and personal advancement. Although its causes are still uncertain and controversial, the net effect was a sudden and general loss of confidence in the economic future.
Great Depression in the United States
Effects of depression in the U.S.:General: