The Great Depression

During the 1920’s, America and the rest of the world had a false sense of prosperity. Federal spending increased three times more than tax collections during World War 1. The US government reduces spending to help balance the budget, but a recession is the result. The decade of the 1920’s saw 600 banks close each year. Membership of the United Mine Workers Union went from 500,000 in 1920 and saw it drop to only 75,000 by 1928.

The American Federation of Labor membership fell from 5.1 million to 3.4 million by 1929. 1200 mergers become the reason 6000 independent companies close. In 1929, only 200 corporations control half of all American Industry. 80 percent of all income-earners were removed from the tax rolls completely. Taxes on the rich fall throughout the decade. One percent of the population owned forty percent of the country’s wealth by 1929. More than 90 percent experienced a drop in disposable income between 1923 and 1929. A single employee Productivity goes up by 43% over ten years, between 1919 and 1929.

The Great Depression Timeline

1921 Mar 4. Warren G. Harding becomes president.
1923 Aug 2. President Harding unexpectedly dies. Calvin Coolidge becomes the 30th president of the United States.
The laissez-faire and non-interventionist type of government that President Coolidge adhered to is believed to be the reason for the arrival of the great depression.
1924 May 26. Immigration Act of 1924 is passed by the US congress. This law controlled the immigration of “undesirable” people, and later may have contributed to unemployment.
Stock Market begins its ascent and is not related completely to the economy at large.
1925 Top tax rate is lowered to 25% which is the lowest top rate since World War I.
Stock Market begins its ascent and is not related completely to the economy at large.
1926 A recession takes place beginning in October and lasts until November 1927. This may have been a sign of things to come.
1928 May. The prices of stock will go up approximately 40% from May 1928 to September 1929, it has been said the “boom” of the stocks was artificially created.
Nov. Herbert Hoover becomes 31st president of the US.
1929 Aug. A Recession begins. The period leading to the stock market crash sees a decline in several areas, production 20%, wholesale prices 7.5%, and personal income.
Oct 29. Wall Street, the financial center of America located in New York, collapses. This day is best known as the Black Tuesday. The stock market loses more than $16 billion for the month.
The average annual earnings of half of Americans is at $750, which is below the minimum subsistence level.
There is a backlog of inventories for businesses growing three times bigger than the previous year.
1930 Feb. The Federal Reserve cuts the prime interest rate from six to four percent.
Jun 17. The Smoot-Hawley Tariff passes, which did not necessarily benefit the US, but economies in Europe.
Supreme Court rules that US Steel’s monopoly did not violate anti-trust laws.
GNP falls 9.4 percent from the previous year while the unemployment rate goes up to 8.7 percent.
1931 Dec 11. In New York, the Bank of the United States collapses.
Stores are looted for their grocery items and food riots are widespread throughout the United States.
Congress does not pass any legislation to alleviate effects of the “Great Depression”
GNP falls 8.5 percent more, while the unemployment rate goes up to 15.9 percent.
Empire State Building opens in New York City and provides a distraction for the people while going through the economic hardship.
1932 Jan 22. Reconstruction Finance Corporation is formed to help the economy.
Jul 22. The Federal Home Loan Bank Act was passed to lower the cost of owning a home.
Nov. Franklin Delano Roosevelt, is elected the 32nd president of the United States. He would serve through WWII and for nearly four terms.
1932 is the worst year of the Great Depression
GNP falls a record 13.4 percent. The unemployment rate goes up to a disheartening 23.6 percent.
The value of Industrial Stocks lose 80% of their value since 1930.
GNP falls a total of 31% since 1929.
13 million lose their jobs dating back to 1929.
International trade falters by more than half since the “Crash”.
Top tax rate is raised from 25 to 63 percent.
1933 Mar 4. FDR is inaugurated as President of the United States.
Mar 9. Roosevelt introduces the New Deal, focusing on the “3 Rs” of relief, recovery and reform.
Jun 16. Glass-Steagall Act of 1932 is passed by Congress, this Act affected banking reforms during the period meant to better manage the practice of speculation.
Dec 5. The 21st Amendment is ratified which leads to the end of prohibition.
Roosevelt declares a bank holiday after people go on a banking panic for three days in a row.
Concerned about Roosevelt redistributing wealth from the rich down to the poor, millionaires Du Pont and JP Morgan plan to overthrow Roosevelt with a military coup. This was known as the Business Plot.
Put into action, congress approves the creation of Agricultural Adjustment Administration, the Civilian Conservation Corps, the Farm Credit Administration, the Federal Deposit Insurance Corporation, the Federal Emergency Relief Administration, the National Recovery Administration, the Public Works Administration and the Tennessee Valley Authority.
In addition, Congress also pass the Emergency Banking Bill, the Farm Credit Act, the National Industrial Recovery Act and the Truth-in-Securities Act.
The rate of unemployment rises slightly to 24.9%.
1934 Jun. The U.S. Securities and Exchange Commission, the FCC, and the National Mediation Board are formed.
Jun 28. The Federal Housing Administration under the National Housing Act of 1934 is established to better housing standards and conditions. The intent was to help stabilize the mortgage loans and the home market.
GNP goes up 7.7% while unemployment goes down to 21.7%
The Reciprocal Trade Agreements Act was passed. This gave the president to bilaterally negotiate with other countries reciprocal trade agreements. This Act helped improve the US economy.
Sweden fully recovers from the Great Depression, making them the first to do so. They used a Keynesian policy of deficit spending.
1935 Apr 8. The most ambitious New Deal agency is formed and named the Works Progress Administration.
Aug 14. The Social Security Act, Banking Act of 1935, and the Emergency Relief Appropriation Act are passed.
A busy time for Congress, they allow the creation of National Labor Relations Board and the Rural Electrification Administration.
1936 Top tax rate is raised to 79 percent.
GNP grows a record 14.1 percent; unemployment falls to 16.9 percent.
1937 Supreme Court declares the National Labor Relations Board to be unconstitutional.
During the summer, the nation goes into another recession. Despite this, the yearly GNP improves 5.0 percent, and unemployment falls to 14.3 percent.
1938 The year-long recession that started in 1937 makes itself felt, which results in the GNP to falls 4.5 percent, and unemployment rises to 19.0 percent.
1939 The United States emerges from the Depression, borrows and spends $1 billion to build the armed forces.
World War II begins in Europe with Nazi Germany invading Poland.
1941 Dec 7. The Japanese attack Pearl Harbor, which resulted in U.S. manufacturing going up a phenomenal 50 percent.