Great Depression

   The Great Depression was the worldwide economic crisis that followed the Wall Street Crash and the Depression that began in the United States in 1929. The calling in or cessation of foreign loans and the imposition of high tariffs led to a shrinking in international trade. As prices fell and trade shrank, the number of unemployed workers worldwide was estimated to be more than 30 million by 1933, with two-thirds of those in Germany, Great Britain, and the United States.

   The Wall Street Crash was not the cause of the collapse but merely the trigger that revealed the underlying weaknesses of international markets and the U.S. economy in particular. The apparent prosperity of the “Roaring 1920s” masked a number of flaws, including the maldistribution of incomes, overproduction and buildup of inventories, falling farm prices, instability of banks, and imbalances in the international economy. The breakdown of financial institutions in the United States led to the failure of more than 5,000 banks between 1929 and 1932, and as money and credit dried up, businesses also reduced output or failed completely. Workers found their wages or hours of work cut, and many were laid off altogether. By 1933, industrial production in the United States had fallen to less than 50 percent of its 1929 levels. The automobile industry that had played such a key part in the prosperity of the 1920s was operating at 20 percent of its capacity.

   Unemployment reached an estimated 17 million people, or 25 percent of the labor force. Farmers, already suffering in the 1920s, saw their situation further deteriorate as commodity prices fell by 55 percent between 1929 and 1932. Almost a quarter of farmers lost their property through foreclosures, and others were driven out by drought and dust storms in the early 1930s, joining the thousands of migrants—“Okies” and “Arkies,”—heading West. Urban workers too took to the road as 250,000 families lost their homes and jobs. Many men abandoned their families, and the number of femaleheaded households increased. Many women were forced to seek work, but gender-based discrimination increased as priority was often given to men. Similarly, African Americans found themselves “last hired, first fired,” and black unemployment rates were twice as high as those of whites. Prejudice against Hispanic Americans forced half a million to return to Mexico in the 1930s.

   Many Americans began to protest as their economic plight worsened. Farmers destroyed produce or poured milk into the road, foreclosures were prevented by mob action, and unemployed workers marched in protests sometimes organized by socialists or communists. In 1932, veterans of World War I marched on Washington, D.C., as part of a Bonus Army calling for payment of war bonuses. Their forcible removal from the capital was the last nail in the political coffin of President Herbert Hoover, whose name had become synonymous with the Depression. Hoover’s inability to abandon a commitment to limited federal action led to his political defeat by Franklin D. Roosevelt in the election of 1932. Roosevelt promised the nation a “New Deal,” and the 1930s witnessed a series of programs aimed at bringing “relief, recovery, and reform.” The result of this political change was the transformation of U.S. politics and the beginning of a welfare state. However, although the situation was considerably alleviated by the New Deal, it was the expansion of industry that came with the World War II that finally ended the Depression. That was in part a result of the economic and political problems caused by the Great Depression in Europe and elsewhere.