Canada And The Caribbean
- In Canada, Between 1929 and 1939, the gross national product dropped 40%, compared to 37% in the U.S. Unemployment reached 28% at the depth of the Depression in 1929 and 1930, while wages bottomed out in 1933. Many businesses closed, as corporate profits of Can$396 million in 1929 turned into losses of $98 million in 1933. Exports shrank by 50% from 1929 to 1933. The worst hit were areas dependent on primary industries such as farming, mining and logging, as prices fell and there were few alternative jobs. Some families saw most or all of their assets disappear and their debts became heavier as prices fell. Local and provincial government set up relief programs but there was no nationwide New Deal-like program.
- The Conservative government of Prime Minister R. B. Bennett retaliated against the American high tariff act of 1930. It raised tariffs on U.S. goods and lowered them on British Empire goods. Nevertheless, the Canadian economy suffered. In 1935, Bennett proposed a series of programs that resembled the New Deal but was defeated in the elections of that year and no such programs were passed.
- Cuba and the Caribbean saw their greatest unemployment during the 1930s because of a decline in exports to the U.S., and a fall in export prices.
But Only Up To A Point
Still, even then there were limits on the appetite for government takeovers. By a 55%-to-29% margin, the public rejected public ownership of the railroads and split 42%-44% on the question of government ownership of the banks
Indeed, when asked if they had to make the choice would they opt for fascism or communism, the public expressed a substantial preference for fascism over communism , while 36% offered no opinion. (When the question was phrased in terms of living under a German- versus a Russian-type government, the public showed a similar preference for the German model.
Moreover, despite widespread deprivation far beyond anything experienced in modern-day America, by a margin of 50%-to-42%, Americans in the mid-1930s rejected the idea of government limiting the size of private fortunes.
Nor was the public was ready to give organized labor a wholehearted embrace. Only 10% said they belonged to a union, and, during the 1936-1937 General Motors strike, only a third said their sympathy lay with the strikers, while 41% sided with the employers. Whats more, fully 60% supported the passage of state laws making sit-down strikes illegal, and about the same proportion favored forceful intervention by state and local authorities half would call out the militia if strike trouble threatened.
Turning Point And Recovery
In most countries of the world, recovery from the Great Depression began in 1933. In the U.S., recovery began in early 1933, but the U.S. did not return to 1929 GNP for over a decade and still had an unemployment rate of about 15% in 1940, albeit down from the high of 25% in 1933.
There is no consensus among economists regarding the motive force for the U.S. economic expansion that continued through most of the Roosevelt years . The common view among most economists is that Roosevelt’s New Deal policies either caused or accelerated the recovery, although his policies were never aggressive enough to bring the economy completely out of recession. Some economists have also called attention to the positive effects from expectations of reflation and rising nominal interest rates that Roosevelt’s words and actions portended. It was the rollback of those same reflationary policies that led to the interruption of a recession beginning in late 1937. One contributing policy that reversed reflation was the Banking Act of 1935, which effectively raised reserve requirements, causing a monetary contraction that helped to thwart the recovery. GDP returned to its upward trend in 1938.
Role of women and household economics
In Japan, official government policy was deflationary and the opposite of Keynesian spending. Consequently, the government launched a campaign across the country to induce households to reduce their consumption, focusing attention on spending by housewives.
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The New Deal And The Works Progress Administration
Herbert Hoover was president at the start of the Great Depression, and by the next election in 1932, Americans had seen conditions go from bad to worse. Many Americans have ancestors who experienced severe hardships in those years. People waited in bread lines, abandoned their farms, and lived in shantytowns known as Hoovervilles. Many Americans blamed Hoover for the Depression, and in 1932, they elected Franklin Delano Roosevelt in a landslide.
During the campaign, Roosevelt promised a new deal for the American people.” He was true to his word, initiating a flurry of reforms and programs known as the New Deal. In 1935, his administration created the Works Progress Administration to get people back to work. Under the WPA, over 8.5 million Americans built roads, bridges, and landmarks like the Hoover Dam. If you have ancestors who were artists, the WPA might have hired them to paint murals or collect oral histories. The WPA paid low wages, but it helped alleviate the suffering of many Americans. The program wound down in 1939.
And Ready To Regulate
Statist views were not limited to support for government spending. Major regulatory programs also received strong endorsements: Fully 70% favored limitations and prohibitions on child labor, even if that required amending the Constitution. Even more endorsed a law that would prevent misleading food, cosmetic and drug advertising. By 52% to 36%, the public also supported an amendment that would allow greater congressional regulation of industry and agriculture and, at least in war-time, federal control of all profits from business and industry was favored by a 64%-to-26% margin.
Perhaps the sharpest departure from todays prevailing ethos is that, by a lopsided 59%-to-29% margin, Americans then said they would prefer public rather than private ownership of the electric power industry! Even more gave a thumbs-up to a takeover of the war munitions industry.
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Causes Of Great Depression
The Great Depression is attributed to the combination of the following factors:
As Food Demand Drops Farm Prices Collapse
In 1920, with the war over and the demand for farm goods decreasing, the U.S. government with little warning announced that it was ending price supports. The farmers, however, continued to produce at near record levels creating surplus commodities that sent prices plummeting. Until then, land prices had been rising rapidly as farmers and non-farmers saw buying farms as a good investment. With the collapse of farm prices, the land bubble burst, often dropping the market value of the land well below what the investor owed on it. The post-war depression did not start with the Stock Market Crash of 1929. For the Midwest, it started in 1921, and farmers and the small towns that depended on the land were hit hard.
In the 1920s, only slightly less than half of the U.S. population lived on farms. When farmers were not making money, they could not buy the products that factories were making. When factories couldnt sell their products, they laid off their workers. The workers could not buy the factory output either, meaning more lay-offs, and the country fell into a downward spiral.
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How Do People Overcome Hardships
The United States had experienced several major economic swings before the Great Depression in the 1930s. During World War I, the U.S. government had vigorously encouraged farmers to expand crop and livestock outputs to feed the army and U.S. allies in Europe. They guaranteed high prices and appealed to the farmers patriotism through slogans like “Food Will Win the War.” Farmers borrowed to buy new machinery to replace the labor lost by sons and hired hands drafted into the military.
Great Depression Ends And World War Ii Begins
With Roosevelts decision to support Britain and France in the struggle against Germany and the other Axis Powers, defense manufacturing geared up, producing more and more private-sector jobs.
The Japanese attack on Pearl Harbor in December 1941 led to Americas entry into World War II, and the nations factories went back in full production mode.
This expanding industrial production, as well as widespread conscription beginning in 1942, reduced the unemployment rate to below its pre-Depression level. The Great Depression had ended at last, and the United States turned its attention to the global conflict of World War II.
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When And What Was The Great Depression
The Great Depression was a worldwide economic crisis that lasted for much of the 1930s. It heavily impacted the United States, where millions of people faced unemployment, homelessness, and poverty.
In economics, a depression is a period during which business, employment, and stock market values fall to very low levels for a significant amount of time . The Great in Great Depression refers to the fact that it was the worst depression in U.S. history.
The start of the Great Depression is often cited as the U.S. stock market crash of 1929, but its causes are complex. Its effects were also complex and widespread and are still discussed. Some can even be seen today in the form of government programs and agencies created to address the crisis at the time.
How A Different America Responded To The Great Depression
Were confirmation needed that the American public is in a sour mood, the 2010 midterm elections provided it. As both pre-election and post-election surveys made clear, Americans are not only strongly dissatisfied with the state of the economy and the direction in which the country is headed, but with government efforts to improve them. As the Pew Research Centers analysis of exit poll data concluded, the outcome of this years election represented a repudiation of the political status quo. Fully 74% said they were either angry or dissatisfied with the federal government, and 73% disapproved of the job Congress is doing.
This outlook is in interesting contrast with many of the publics views during the Great Depression of the 1930s, not only on economic, political and social issues, but also on the role of government in addressing them.
Quite unlike todays public, what Depression-era Americans wanted from their government was, on many counts, more not less. And despite their far more dire economic straits, they remained more optimistic than todays public. Nor did average Americans then turn their ire upon their Groton-Harvard-educated president this despite his failure, over his first term in office, to bring a swift end to their hardship. FDR had his detractors but these tended to be fellow members of the social and economic elite.
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The New Deal: A Road To Recovery
Among the programs and institutions of the New Deal that aided in recovery from the Great Depression was the Tennessee Valley Authority , which built dams and hydroelectric projects to control flooding and provide electric power to the impoverished Tennessee Valley region, and the Works Progress Administration , a permanent jobs program that employed 8.5 million people from 1935 to 1943.
When the Great Depression began, the United States was the only industrialized country in the world without some form of unemployment insurance or social security. In 1935, Congress passed the Social Security Act, which for the first time provided Americans with unemployment, disability and pensions for old age.
After showing early signs of recovery beginning in the spring of 1933, the economy continued to improve throughout the next three years, during which real GDP grew at an average rate of 9 percent per year.
A sharp recession hit in 1937, caused in part by the Federal Reserves decision to increase its requirements for money in reserve. Though the economy began improving again in 1938, this second severe contraction reversed many of the gains in production and employment and prolonged the effects of the Great Depression through the end of the decade.
Top 5 Causes Of The Great Depression
- M.A., History, University of Florida
- B.A., History, University of Florida
The Great Depression lasted from 1929 to 1939 and was the worst economic depression in the history of the United States. Economists and historians point to the stock market crash of October 24, 1929, as the start of the downturn. But the truth is that many things caused the Great Depression, not just one single event.
In the United States, the Great Depression crippled the presidency of Herbert Hoover and led to the election of Franklin D. Roosevelt in 1932. Promising the nation a New Deal, Roosevelt would become the nation’s longest-serving president. The economic downturn wasn’t just confined to the United States it affected much of the developed world. One cause of the depression in Europe, was that the Nazis came to power in Germany, sowing the seeds of World War II.
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Social & Political Impacts
One visible effect of the depression was the advent of Hoovervilles, which were ramshackle assemblages on vacant lots of cardboard boxes, tents, and small rickety wooden sheds built by homeless people. Residents lived in the shacks and begged for food or went to soup kitchens. The term was coined by Charles Michelson, publicity chief of the Democratic National Committee, to refer sardonically to President Herbert Hoover whose policies Michelson blamed for the depression.
The federal programs launched by Hoover and greatly expanded by President Roosevelt’s New Deal used massive construction projects to try to jump-start the economy and solve the unemployment crisis. The alphabet agenciesCCC, FERA, WPA and PWA built and repaired the public infrastructure in dramatic fashion, but did little to foster the recovery of the private sector. FERA, CCC and especially WPA focused on providing unskilled jobs for long-term unemployed men.
Industry
Economic historians led by Price Fishback have examined the impact of New Deal spending on improving health conditions in the 114 largest cities, 19291937. They estimated that every additional $153,000 in relief spending was associated with a reduction of one infant death, one suicide, and 2.4 deaths from infectious disease.
Facts Of The Recovery
Figure 1 uses monthly data. This allows us to see more finely the movements of the economy, as contrasted with the use of quarterly or annual data. For present purposes, the decade of the Depression runs from August 1929, when the economy was at its business cycle peak, through March 1933, the contraction trough, to June 1942, when the economy clearly was back to it long-run high-employment trend.
Figure 1 depicts the behavior of industrial output and prices over the Great Depression decade, the former as measured by the Index of Industrial Employment and the latter by the Wholesale Price Index. Among the notable features are the large declines in output and prices in the Great Contraction, with the former falling 52 percent and the latter 37 percent. Another noteworthy feature is the sharp, severe 1937-38 depression, when in twelve months output fell 33 percent and prices 11 percent. A third feature is the over-two-year deflation in the face of a robust increase in output following the 1937-38 depression.
Lastly, the budget position of the federal government is shown in Figure 5. One of the notable features is the sharp increase in expenditures in mid-1936 and the equally sharp decrease thereafter. The budget therefore went dramatically into deficit, and then began to move toward a surplus by the end of 1936, largely due to the tax revenues arising from the Social Security Act of 1935.
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What Really Caused The Great Depression
It’s hard to pinpoint exactly what specific factor caused the Great Depression. But economists and historians generally agree that there were several mitigating factors that led to this period of downturn. These include the stock market crash of 1929, the gold standard, a drop in lending and tariffs, as well as banking panics, and contracted monetary policies by the Fed.
What Was The Great Depression
The Great Depression, which began in the United States in 1929 and spread worldwide, was the longest and most severe economic downturn in modern history. It was marked by steep declines in industrial production and in prices , mass unemployment, banking panics, and sharp increases in rates of poverty and homelessness.
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Mistakes By The Young Federal Reserve
The relatively new Federal Reserve mismanaged the supply of money and credit before and after the crash in 1929. According to monetarists such as Milton Friedman and acknowledged by former Federal Reserve Chair Ben Bernanke.
Created in 1913, the Fed remained fairly inactive throughout the first eight years of its existence. After the economy recovered from the 1920 to 1921 depression, the Fed allowed significant monetary expansion. The total money supply grew by $28 billion, a 61.8% increase between 1921 and 1928. Bank deposits increased by 51.1%, savings and loan shares rose by 224.3%, and net life insurance policy reserves jumped 113.8%. All of this occurred after the Federal Reserve cut required reserves to 3% in 1917. Gains in gold reserves via the Treasury and Fed were only $1.16 billion.
By increasing the money supply and keeping the interest rate low during the decade, the Fed instigated the rapid expansion that preceded the collapse. Much of the surplus money supply growth inflated the stock market and real estate bubbles.
After the bubbles burst and the market crashed, the Fed took the opposite course by cutting the money supply by nearly a third. This reduction caused severe liquidity problems for many small banks and choked off hopes for a quick recovery.
Trade routes created during World War II remained open during the Great Depression and helped the market recover.