The Great Depression (1929-1939)
A worldwide depression struck countries with market economies at the end of the 1920s. Although the Great Depression was relatively mild in some countries, it was severe in others, particularly in the United States, where, at its nadir in 1933, 25 percent of all workers and 37 percent of all nonfarm workers were completely out of work. Some people starved; many others lost their farms and homes. Homeless vagabonds sneaked aboard the freight trains that crossed the nation. Dispossessed cotton farmers, the “Okies,” stuffed their possessions into dilapidated Model Ts and migrated to California in the false hope that the posters about plentiful jobs were true. Although the United States had experienced several depressions before the stock market crash on October 27, 1929, none had been as severe nor as long lasting before "Black Thursday" struck Wall Street. At first, economists and leaders thought this was a mild bump, perhaps merely a correction of the market, or in any case, no worse than the recession the nation suffered after World War I.
Numbers soon proved the optimists incorrect. The depression steadily worsened. By spring of 1933, when FDR took the oath of office, unemployment had risen from 8 to 15 million (roughly 1/3 of the non-farmer workforce) and the gross national product had decreased from $103.8 billion to $55.7 billion. Forty percent of the farms in Mississippi were on the auction block on FDR's inauguration day. Although the depression was world wide, no other country except Germany reached so high a percentage of unemployed. The poor were hit the hardest. By 1932, Harlem had an unemployment rate of 50 percent and property owned or managed by blacks fell from 30 percent to 5 percent in 1935. Farmers in the Midwest were doubly hit by economic downturns and the Dust Bowl. Schools, with budgets shrinking, shortened both the school day and the school year.
The breadth and depth of the crisis made it the Great Depression.
No one knew how best to respond to the crisis. The Great Depression is often called a “defining moment” in the twentieth-century history of the United States. Its most lasting effect was a transformation of the role of the federal government in the economy. The long contraction and painfully slow recovery led many in the American population to accept and even call for a vastly expanded role for government, though most businesses resented the growing federal control of their activities. The Great Depression is often called a “defining moment” in the twentieth-century history of the United States. Its most lasting effect was a transformation of the role of the federal government in the economy. The long contraction and painfully slow recovery led many in the American population to accept and even call for a vastly expanded role for government, though most businesses resented the growing federal control of their activities. President Hoover believed the dole would do more harm than good and that local governments and private charities should provide relief to the unemployed and homeless. By 1931, some states began to offer aid to local communities. FDR, then governor of New York, worked with Harry Hopkins and Frances Perkins to begin a direct work relief program. This helped only a very few. By 1932, only 1/4 of unemployed families received any relief. In 1932, only 1.5 percent of all government funds were spent on relief and averaged about $1.67 per citizen. Cities, which had to bear the brunt of the relief efforts, teetered on the edge of bankruptcy. By 1932, Cook County (Chicago) was firing firemen, police, and teachers (who had not been paid in 8 months). Breadlines and Hoovervilles (homeless encampments) appeared across the nation.
Those hurt the most were more stunned than angry. Many sank into despair and shame after they could not find jobs. The suicide rates increased from 14 to 17 per 100,000. Protest that did occur was local, not national: "farm holidays," neighbors of foreclosed farmers refusing to bid on farms at auction, neighbors moving evicted tenants' furniture back in, and local hunger marches.
Resistance to protest often turned violent. In 1932, four members of the Dearborn hunger march were shot and killed when 1,000 soldiers accompanied by tanks and machine guns evicted veterans living in the Bonus Army camp in Washington, D.C.
FDR, after assuming the presidency, promoted a wide variety of federally funded programs aimed at restoring the American economy, helping relieve the suffering of the unemployed, and reforming the system so that such a severe crisis could never happen again. However, while the New Deal did help restore the GNP to its 1929 level and did introduce basic banking and welfare reforms, FDR refused to run up the deficits that ending the depression required. Only when the federal government imposed rationing, recruited 6 million defense workers (including women and African Americans), drafted 6 million soldiers, and ran massive deficits to fight World War II did the Great Depression finally end.