The Great Depression remains as the worst and the longest economic downturn in modern history. The stock market crash of 1929 caught everyone off guard. It also dramatically marked the end of a decade-long economic growth and prosperity that marked the Roaring ’20s.

The following decade ushered the citizens of the United States and other affected countries into extreme suffering. The Great Depression period, however, also sparked fundamental changes in economic policy. During this time, the US government implemented aggressive measures to create a safety net for its citizens and the economy. And in this article, we will help you to look back at this momentous period in history and assess the state of the economy from 1929 to 1939 through a series of relevant Great Depression statistics.

Black Tuesday and Its Aftereffects

October 29, 1929, also known as Black Tuesday, was the fourth and last day of the worst stock market crash in the history of Wall Street. Unbeknownst to many, this would also kick off a series of unfortunate events that would drag the United States’ economy through its lowest point for decades.

• On Black Thursday (October 24, 1929), 12,894,650 shares were traded.
• During Black Tuesday (October 30, 1929), 16,410,030 shares were traded on the New York Stock Exchanges, prompting the stock market to crash.
• Stock prices rose in 1932 but only for 20% of their value in the summer of 1929.
• According to Dow Jones Industrial Average (DJIA), the stock market peaked at 381.17 on September 3, 1929, and bottomed at 41.22 on July 8, 1932.
• The American stock market plunged by nearly 90% within three years and would not recover for almost 25 years.
• The industrial production output suffered the worst decline at 47%.
• The wholesale price index suffered a 33% decline.
• The industrial economic output of the US was reduced by nearly 50%, which amounted to $55 billion.
• Gross domestic product (GDP) suffered its lowest point at 30%.

Impact on the Labor Force

Men made up the majority of the labor force. With the economic collapse hitting industrial labor the hardest, a lot of families had to rely on women because the majority of the jobs available were domestic work. The rise in employment for women shook the norms of gender roles, sometimes leaving husbands more worried about losing their authority over their wives than having food on the table. 

• Following the stock market catastrophe, wages suffered a 42% cut.
• Women’s employment rate rose from 10.5 million in 1930 to 13 million by 1940.
• In 1933, nearly 25% of the US workforce was unemployed.

Multiple Bank Runs

The stock market crash triggered mass anxiety over financial security. Consumers were spending less and less; furthermore, investments were being pulled out of business ventures. The unhealthy circulation of money, or lack thereof, resulted in bankruptcies and financial institutions like banks were no longer seen as trustworthy as before. In 1930, depositors began withdrawing their funds all at once, forcing banks to liquidate loans and sell assets even at bargain prices, thus resulting in bank failures.

• Approximately 650 banks closed in 1929, which grew to 1,300 banks in 1930.
• The biggest bank failure in the history of the US happened in 1931 when New York’s Bank of the United States collapsed. At the time, the bank held more than $200 million in deposits.
• A total of $2 million was withdrawn from New York’s Bank of the United States in a single day. 
• A total of 9,000 banks failed from the beginning of the Great Depression to 1939.
• An estimated number of 4,000 banks failed in 1933 alone.
• Also, during 1933, around $140 billion worth of bank deposits were lost due to bank failures.

The Tale of Two Presidents

President Herbert C. Hoover’s inopportune time in the office would play a major role in the actions taken by the government in the wake of the Great Depression. To combat the worsening impact of the economic downfall, he focused on extending federal control over spending, wage policy, tax policy, agriculture, international trade, and immigration. The increase in federal spending he implemented, however, only increased budget deficits. 

• During President Hoover’s tenure, the total increase in spending reached 48% in four years.
• The budget deficit of 1931 was 52.5% of the total expenditures and 43.3% in 1932.
• Federal debt ballooned to $48.2 billion in 1939 and $50.7 billion in 1940.

When Franklin D. Roosevelt took office in 1933, he enacted a series of reforms and policies to reduce the unemployment rate and start the process of reviving the economy. Called the “New Deal,” the series of programs included amendments to fiscal policy, banking and monetary reforms, public works, farm, and rural programs, and trade liberalization, which helped lay down a more robust economic foundation. The New Deal also helped establish a stronger labor movement and the Social Security Act, both of which would leave a lasting impact and shape today’s labor and insurance policies.

• The New Deal programs by President Roosevelt reduced the unemployment rate in 1934 by 3.2%.
• In 1938, President Roosevelt passed the Fair Labor Standards Act (FLSA) as part of the New Deal, which set the first minimum wage in the US, which amounted to $0.25/hour.
• Union membership rate increased from 1 in 8 workers in 1930 to 1 in 4 workers in 1940.

In 1936, a survey conducted with the Works Progress Administration (WPA) gathered the following information from more than 6,000 contractors in the building/construction industry that worked on more than 13,000 projects in 105 cities all over the US:

• 186,145 workers had an average earning of $ 0.918 per hour.
• The average earning for bricklayers, electricians, and structural ironworkers was more than $1.30 per hour.
• Laborers’ average earning was $ 0.516 per hour.
• Another survey, this time conducted by the US Bureau of Labor Statistics in 1937, showed that 95% of salaried workers employed by 90,000 firms were entitled to paid annual vacations.

Businesses That Survived the Depression

The Great Depression era was not entirely wrought with failures. Some businesses managed to thrive amid the biggest economic crisis in history. At the time when office establishments were barely operational, and the number of banks closing was growing drastically, IBM launched the 801 Bank Proof Machine. This equipment was an automated check-processing machine developed by Lincoln Fuller modeled after IBM chairman and CEO Thomas Watson Sr.’s idea of equipment for the “demands of the future.”

• Within four years, IBM installed 500 proof machines with over 140 clients, resulting in millions of dollars in revenues from proof machines alone.

Automotive was among the industries that suffered tremendous losses during the Great Depression period. 

• The sales of brand new automobiles slid by 75% from 1929 to 1932.
• Automotive companies suffered a combined loss of $191 million within three years.
• GM implemented a 70% cut on the price of expensive vehicles to reduced inventories.

General Motors (GM), Ford, and Chrysler dominated the auto industry. Among them, only GM and Chrysler managed to thrive, with Ford Motors barely making it. The reason behind GM’s and Chrysler’s growth during the Great Depression period was their ability and willingness to adapt to the changes. GM shifted the production from manufacturing high-end units to affordable vehicles, targeting the lower end of the market to reduce losses.

Chrysler followed the same route by focusing on the budget brand, Plymouth. Chrysler enhanced the advertising and marketing support for Plymouth, resulting in a surge in sales. Meanwhile, Ford pursued the opposite route and increased the cost of the manufactured cars to make up for the high production cost during the economic crisis.

Can the Great Depression Happen in Modern Times?

The global stock market plunged by 12% on March 17, 2020, due to the Coronavirus pandemic, which is the lowest point since Black Monday in 1987. The succeeding events seem to follow a familiar pattern of unemployment and business closure. Between March and April, a total of 30 million individuals in the US have filed for unemployment benefits. Nonessential businesses are not operational for weeks, and uncertainties about the lasting impact of the pandemic keep everyone on edge. It is, however, too early to say how the current economic crisis will compare to the Great Depression of the 1930s.

References:

1. Great Depression History
2. Great Depression
3. What Was the Great Depression?
4. Stock Market Crash of 1929
5. Last Hired, First Fired: How the Great Depression Affected African Americans
6. Unemployment Rate by Year Since 1929 Compared to Inflation and GDP
7. Underpaid, But Employed: How the Great Depression Affected Working Women
8. Impact of The Great Depression on Women
9. Impact of The Great Depression on Gender Roles and Sexual Relations
10. Learning from Companies That Thrived After the Great Depression
11. Chronological History of IBM
12. Hoover’s Economic Policies
13. Compensation from Before World War I Through the Great Depression
14. Bank Run
15. Wall Street Suffers Worst Day Since 1987 as Recession Fears Grow