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THE GREAT DEPRESSION  1930-1940

It can be argued that the Great Depression is perhaps the most catastrophic event in American history.  It is also one of the most misunderstood. In order to avoid similar experiences in the future, we need to be students of history and understand the forces that contributed to this tragic event.

Why do we call it the GREAT Depression?  What was so different and catastrophic about these economic times?

Year GDP-US(billions)

1930 91.2

1931 76.5

1932 58.7

1933 56.4

1934 66

1935 73.3

1936 83.8

1937 91.9

1938 86.1

1939 92.2

1940 101.4

Average % rate of unemployment

1929: 3.2
1930: 8.9
1931: 16.3
1932: 24.1
1933: 24.9
1934: 21.7
1935: 20.1
1936: 16.9
1937: 14.3
1938: 19.0
1939: 17.2

1940:   14.6

1941:  9.6

Generations have been told that Great Depression was caused by stock market crash of 1929……..

WAS THE GREAT DEPRESSION CAUSED BY THE STOCK MARKET CRASH OF 1929?

Dow Jones Industrial Average (DJIA)  

1/3/1929 300

9/3/1929 381

10/22/1929 327

10/29/1929 230 “Black Tuesday”    Stock Market loses 33% in one week

11/13/1929 199

April 1930 294

QUESTION:  If the Oct 1929 crash caused the Great D, how do you explain the fact that the market was “back” by April 1930 but the economy wasn’t?

Background / History

Several downturns in stock prices of similar magnitude to 1929 BUT……..

None resulted in anything like the prolonged unemployment and contraction of the 1930’s

During the Recessions of 1973-1975 and 1982-1983 were stock price declines similar to 1929? How long did both of these recessions last?

What about Oct 1987?  What happened to the “Dow” during that period? Was there as recession?

WHY WAS THE GREAT DEPRESSION SO LENGTHY AND SEVERE?

Please discuss the following four major policies during the course of the great Depression.  What were the policies being implemented by the government and what was the result of each policy?

  1. Monetary Policy – M1 levels, bond sales, bank failures, reserve requirements
  • Smoot-Hawley Trade Bill, June 1930
  • Fiscal Policy – Taxes
  • Price Controls

What brought the United States out of the Great Depression?