October 1929, brought a dreadful decade for the Americans. Economic globalization met the catastrophic economic deflation in the 20th century. An overlooked historical event became a worldwide phenomenon when the stock market crashed. The horrors of the Great Depression started haunting the people with the worst recession ever recorded in history.
Fateful events subjected Americans to inflation and unemployment. The factories and industries were liquidated; mines and mills were put to a halt which left people jobless, homeless, and penniless. Moreover, the farmers lost their lands and migrated to urban towns but it was worthless as there was no escape from the suffering.
What was the cause of the Great Depression in American history?
Apparently, the crash at the supermarket was an effect of a series of chain reactions that led to an overlooked historical event in America. There could be various causes of this economic crisis that we conjecture from records of history.
At the beginning of 1920, the economic upturn made people optimistic in terms of getting rich quickly if they jumped on the right opportunity at the right time. The investors of Wall Street planned their failure by buying stocks on a very little margin and even borrowed money for investment by putting their stocks as collateral.
Eventually, they earned a lot more money but the scenario changed completely when Dow Jones industrial average hit a low on Monday and companies started to lose their stocks and went bankrupt. Millionaires were pinching pennies overnight leaving their employees out of work.
The Imbalance of Supply and Overproduction
After World War I, in the 1920s farmers were in debt after buying more machinery and producing more supply which was not even needed or sold. The overproduction of crops exhausted their lands and resources. As a result, prices were decreased in the agricultural and industrial sectors as they were facing the loss.
Oversight of the Federal Reserve System
The relatively newly formed institution would have prevented the Great Depression altogether but it supposedly added fuel to the fire. It could have maintained the supply of money and the nation’s economy but it failed badly. The drastic increase in the supply of money between 1921 and 1929 after the First World War resulted in a decrease in interest rates.
The simple monetary policies helped people loan more money and overinvest but when it went out of control the Feds controlled it by increasing the interest rates. This move helped them take the stock market down but then it kept coming down drastically which also proved to be a nail in the coffin for the crash in the stock market resulting in the Great Depression, one of an overlooked historical event.
The Smoot Hawley Tariff Act
The situation worsened more when President Hoover signed the law in 1930. The act was proposed when the economy was strong but it was implemented at the wrong time and the country was already drowning.
The law increased the tariff rate up to 16% to protect its factories from competition with the lesser-priced items of overseas companies. However, this turned out to be a suicide mission when other countries started putting taxes on US exports and the industries faced a downfall.
The Gold Standard
The United States was on Gold Standard like many other countries that designated the dollar reparable in gold and fixed its value in 1929. The crash of Wall Street caused panic among investors and they started to accumulate gold by trading their dollar bills. This made the country’s deficit of paper money and gold reserves almost empty which also impacted the economy badly.
Worth Reading: The Industrial Revolution
Historical Timeline of the Great Depression
|1929||Stock Market collapse of the Wall Street|
|4th March||· Herbert Clark Hoover became President of America.
· He tried to govern through capitalism.
|August||· The economy was booming.
· Feds increased the discount rate to preserve the gold standard and stop inflation.
|24th October||· The crash of the Stock Market was initiated.
· The day was marked “Black Thursday.”
· Gradually the world fell prey to an overlooked historical event: the Great Depression.
|29th October||· Prices of stocks fell more, leaving the bankers frenzied.
· Industries and mills were closed.
· Unemployment rose.
|1930||Beginning of the Dust Bowl|
|17th June||· President Herbert signed the Smoot-Hawley Tariff Act.
· 23 States of the US were hit by the worst drought known as the Dustbowl.
|November||· The economy was failing badly so were the banks.
· Inflation was on the rise.
· Bread lines and soup kitchens became a common sight to feed the masses.
· Shanty towns appeared with homeless and jobless people.
|1931||Food Brawls and Closures of Banks|
|February||· Food riots were common as people were unemployed.
· The effects of the Great Depression were getting worse.
· African Americans were being deported as they were hit the most by the Great Depression.
· The drought also forced people to migrate.
|11th December||· President Herbert increased the income tax to 25% to avoid budget deficits.
· The Bank of United States collapsed with almost $200 million in deposits which was one of the biggest failures.
|1932||Vote in of President Franklin D. Roosevelt|
|January||· Congress created the Reconstruction Finance Corporation.
· It loaned $ 2 billion to avoid the failure of financial institutions.
· The economy was hitting rock bottom.
· People started to get relief through the efforts of the new President.
|6th June||· President Herbert signed the Revenue Act and increased income tax which impacted negatively.|
|2nd July||· A presidential candidate, Franklin D. Roosevelt gave his recovery plan for the economy in a “New Deal” speech.|
|8th November||· Franklin D. Roosevelt became the 32nd President of the United States.|
|1933||First Hundred Days in the Office|
|4th March||· 15 laws were set in motion to deal with the Great Depression.|
|5th March||· All banks were closed for a “Bank Holiday”|
|9th March||· Emergency Banking Act was formed to close all the banks to recover from Depression.|
|12th March||· ‘Fireside Chats’ was initiated by the President to keep the nation updated about reforms.|
|20th March||· Government Economy Act was instigated to control the expenditure of the government.|
|22nd March||· Taxes were imposed on sales of alcohol through Beer-Wine Revenue Act to increase revenue.|
|May||· More acts were introduced like the Agricultural Adjustment Act, the Tennessee Valley Authority Act, and Federal Emergency Relief Act.
· Efforts were made to create more opportunities to recover.
|8th November||· Civil work administration tried to employ people by creating 4 million jobs in the construction sector.|
|1934||Continuation of Drought and Dust Storms|
|30th January||· Gold Reserve Act was implemented which prohibited the general public from keeping gold and increased the price of gold.|
|15th April||· The US was hit by the worst sandstorm remarking it as ‘Black Sunday.’|
|· President introduced the Soil Conservation act to relieve the sufferings of farmers.|
|· Securities and Exchange Commission modulated the stock market.
· Federal Housing Authority issued Federal mortgage insurance.
· 75% of the country was drowning in drought.
|1935||Works Progress Administration’s Creation|
|30th April||· Farmers were lent loans and training by Resettlement Association.|
|6th May||· 8.5 million People were employed by the Work Progress Administration.|
|20th May||· Rural Electrification Act was put in place to produce electricity for farms.|
|August||· Social Security Act dispensed income for the elderly, disabled, and blinds through their Social Security Trust Fund.|
|1936||President Franklin D. Roosevelt Re-elected|
|June||· Heat waves tortured the drought-stricken Americans.|
|3rd November||· President Franklin D. Roosevelt continued his presidential term yet again.
· The unemployment rate decreased to 16.9% by the end of the year.
|1937||New Deal Programs|
|· The President had to deal with the return of debt and had to exempt the New Deal Programs.
· The economy witnessed growth by the end of the year to 5.1%.
|1938||Growth Of The Economy|
|June||· The rate of unemployment was steadily decreasing.
· The country eventually defeated the Great Depression as the economy was growing again.
|1939||World War II|
|· Federal education, Social Security, Food, and Drug safety were offered by a Federal Security Agency.|
|November||· After the war broke out, President Roosevelt decided to support Britain.
· The defense budget rose and income also increased with it.
· At the end of World War II, the United States surfaced as the world’s only economic superpower.
Who was affected by the Great Depression most?
An overlooked historical event changed the course of people’s life. The effects of the Great Depression spread like a wildfire. People from all walks of life saw their incomes drop. Families which enjoyed financial stability were left distraught by the Depression. However, some people were affected more by the Great Depression.
African Americans were hit most badly by the Great Depression. Like always they were subjected to racial discrimination and hate crimes. They had to let go of their jobs to give them to their superior whites. Dust Bowl caused a lot of devastations in agriculture which rose unemployment for farmers.
Even their traditional jobs of servants or janitors were being given to the whites. Racial violence and unemployment contributed to the difficulties of black Americans. They were always amongst the last to get hired and first to get fired.
Men and Children
Men who were disciplined to work and earn a livelihood for their families took a major hit too. The unemployment was most difficult for them to cope with, the sight of destitute families and starvation made them more helpless. They would leave and wander in the streets every day in search of jobs. Some even abandon their families and homes in disappointment. The suicide rate increased drastically in the 1930s.
Children had to carry the weight of these hardships on their shoulders as well. They had to drop out of their schools; many even gave up their dreams to go to college. Many children wanted an end to poverty and starvation. So, they went to labor under the worst conditions. Some even begged to get some food on the table.
The Great Depression, an overlooked historical event is a record of how the US emerged as one of the super economic powers. Depression was one of the darkest times in the history of America. The economic boom was transformed into a downturn in no time.
Social Security was an outcome of the Depression which benefits the people till today. Secondly, the Great Depression empowered women to work and support themselves as well as their households. The Depression shaped a new generation of Americans in a way that cannot be forgotten.