The Great Depression

Sad Times :(

The overview of the Great Depression (1929~1941) :(

collapse of the stock market
Thousands lost jobs, savings, income, businesses

Causes

Stock Market Crash of 1929:
1. The collapse of stock prices on Wall Street in October 1929 triggered a financial panic, leading to widespread economic downturn.
2. The crash occurred on October 29, 1929, also known as Black Tuesday, when stock prices on the New York Stock Exchange plummeted dramatically.
3. Several factors contributed to the crash:
  1. Speculative frenzy in the stock market, with investors borrowing heavily to buy stocks, often on margin
  2. investors became increasingly anxious and began selling their stocks in large numbers.
  3. This thus started to spread financial panic outside of wallstreet, eventually leading everyone to start selling stocks
Bank Failures:
1. As the stock market crashed, many banks that had invested depositors' money in the stock market faced insolvency, causing widespread bank failures.
Overproduction and Underconsumption:
1. Industries were producing goods at a rate faster than consumers could purchase them, leading to a surplus of goods and declining prices.

Effects

Unemployment:
1. Soared to approximately 25%, leaving millions without work and facing despair.
2. Industries across the board faced layoffs, with workers struggling to find employment in any sector.
3. Unemployment was particularly devastating for minority communities, exacerbating existing inequalities.
Bank Failures:
1. Thousands of banks collapsed, leading to the loss of savings for depositors and worsening the economic crisis.
2. Runs on banks became common as people rushed to withdraw their money, further destabilizing the financial system.
3. The collapse of banks led to a loss of trust in the banking system, hindering economic recovery efforts.
Homelessness:
1. Many individuals and families lost their homes due to foreclosure or eviction, unable to keep up with mortgage payments or rent.
2. Shantytowns, known as "Hoovervilles," sprang up across the country, where homeless individuals lived in makeshift shelters.
3. Overcrowded and unsanitary living conditions in Hoovervilles contributed to health issues and social unrest.
Poverty:
1. Poverty rates rose sharply as families struggled to afford basic necessities such as food, clothing, and shelter.
2. Children were particularly vulnerable to poverty, with malnutrition and lack of access to education affecting their well-being.

The NEW DEAL! (Alphabet Soup)

Civilian Conservation Corps (CCC):
1. Provided jobs for young, unemployed men in conservation and natural resource management projects.
2. Participants engaged in activities such as reforestation, soil conservation, and firefighting, contributing to environmental preservation and infrastructure development.
Works Progress Administration (WPA):
1. Created jobs for unemployed individuals through public works projects, including the construction of roads, bridges, and buildings.
2. Projects ranged from infrastructure improvements to artistic endeavors, employing millions and stimulating economic growth.
Social Security Act: (Very important as the concept will continue into later times)
1. Established a system of old-age pensions, unemployment insurance, and aid to dependent children, providing a safety net for vulnerable populations.
2. Significantly expanded the role of the federal government in providing social welfare and economic security.
Securities and Exchange Commission (SEC):
1. Regulated the stock market and restored investor confidence through increased transparency and oversight.
2. Implemented regulations to prevent fraudulent practices and ensure fair and orderly securities markets.
Banking Reforms:
1. Implemented measures to stabilize the banking system, including the creation of the Federal Deposit Insurance Corporation (FDIC) to insure bank deposits and prevent future bank runs.
2. Restored confidence in the banking system and safeguarded individual savings, laying the foundation for a more stable financial system.

Great plains

Dust Bowl:
1. Severe drought and poor farming practices in the 1930s led to the Dust Bowl in the Great Plains.
2. Prolonged drought, combined with unsustainable agricultural techniques such as overgrazing and excessive plowing, caused the topsoil to dry up and turn to dust.
3. Massive dust storms, known as "black blizzards," swept across the region, causing widespread agricultural devastation and ecological damage.
4. Crops failed, livestock perished, and fertile farmland turned into barren wasteland, forcing many farmers into poverty and displacement.

Impact

Ignorance:
1. Farmers in the Great Plains believed that the Great Depression wouldn't hit them; continued to live life as normal. Believed the situation didn't involve them.
2. Continued to plow land, resulting in a surplus of supply without demand due to poverty throughout America.
  1. Spurred on by the idea "Rain follows the plow"
3. Despite government warning, farmers in the Great plains continued to increase crop harvest yearly to cut the deficit.
4. Years of excess supply with no demand resulted in devastating financial impact in the Great plain region
  1. Farmers suffered equal if not greater challenges compared to people in the city.

Legacy

Economic Reforms:
1. The Great Depression prompted significant reforms in economic policy, including increased government intervention in the economy and the establishment of social safety nets.
2. New Deal programs implemented by President Franklin D. Roosevelt aimed to provide relief, recovery, and reform, laying the groundwork for modern economic policies.
Shift in Political Ideology:
1. The Depression sparked a shift in political ideology, with many Americans embracing the role of government in addressing social and economic challenges. (Will change later due to Reagonomics --> change)
2. Increased support for government intervention in the economy and social welfare programs reshaped political discourse and policies for decades to come.
Global Impact:
1. The Great Depression had far-reaching effects beyond the United States, contributing to economic downturns and political instability worldwide.
2. The collapse of global trade and financial markets exacerbated economic hardships in many countries, leading to social unrest and political upheaval.
Lessons Learned:
1. The Great Depression highlighted the importance of financial regulation, social welfare programs, and government intervention in stabilizing the economy and protecting vulnerable populations during times of crisis.
2. Governments around the world implemented reforms and safeguards to prevent a recurrence of such a catastrophic economic collapse, including regulations to prevent speculative excesses and social safety nets to cushion the impact of economic downturns.

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