The key points and events of the Great Depression.

https://www.thestreet.com

'Black Tuesday' - The Wall Street Crash

The Great Depression has its origins in the Wall Street Crash of 1929 which saw the New York Stock Exchange go into freefall, with share prices plummeting and thousands of Americans thrown into poverty or destitution.

This caused a ripple effect across first the USA, and then the whole world – a world which included many countries still recovering from the death and destruction of the First World War. It remains the longest and most widespread economic depression the world has ever seen and lasted at least into the late 1930’s, if not the 1940's.

Contemporary painting capturing the drama of the Wall Street Crash.

https://www.pinterest.co.uk/pin/753649318877514311/

Economic disaster

An unemployed man holds a sign voicing his frustrations. Circa early 1930s.

General Photographic Agency/Getty Images; Ryan Stennes

As the effects of the stock market crash started to be felt across the world, gross domestic product (GDP) plummeted by up to 15% (in comparison, the damaging ‘Great Recession’ of 2008-2009 saw GDP fall by a 1%.)

It made little difference whether a country was rich or poor – both suffered the effects. Businesses struggled as profits plummeted, wages went down sharply, and international trade was stifled – in some cases being reduced by as much as 50%.

Unemployment drastically increased across the world as construction projects ground to a halt, businesses folded, and entire industries collapsed. Countries with a large agricultural base suffered enormously as crop prices fell steeply, mines closed, and logging companies were forced to shut.

Jack Whinery and his family at home in Pie Town, New Mexico, a community formed by migrant farmers from the dust bowl in Texas and Oklahoma.

https://www.houstonchronicle.com/

The USA

The United States initially took the brunt of the effect of the crash, with the effects being initially felt across the country. Farmers in the Plains states were hit the hardest.

A drought in the 1920s had already left them financially vulnerable before the Great Depression even hit. Because farmers now found themselves unable to even afford to harvest their crops, they were left to rot and with large dust storms occurring, entire tracts of the US agricultural regions became known as the Dust Bowl, which further hit US farmers hard.

A huge amount of farm workers abandoned their farms or had them foreclosed by the banks. This led to a huge migration of people with 2.5 million workers relocating to other areas of the US, 200,000 to California alone. At its height, 10% of US Farms changed hands despite the government’s attempts to alleviate the issues.

Thirty-two-year-old Florence Owens Thompson with three of her seven children at a pea pickers' camp in Nipomo, Calif. March 1936.

Dorothea Lange/Farm Security Administration/Library of Congress/Wikimedia Commons; Ryan Stennes

Flood victims line up for Red Cross relief in Kentucky. 1937.

Margaret Bourke-White; Ryan Stennes

Comparison of unemployment in the USA during the Great Depression and the 2007 Great Recession.

https://www.visualizingeconomics.com/

Worldwide

The US economy was enormous with extensive international trade, so when it started to struggle, it had an immediate, knock-on effect on other countries.

Foreign governments reduced spending on foreign goods by imposing tariffs, quotas and exchange controls.

The measures taken to try and reduce the impact varied from country to country, the success or failure dependent on the countries own internal economic and political structure.

A group of children at the window of a shack. Location unspecified. Circa 1939.

FPG/Hulton Archive/Getty Images; Ryan Stennes

In Austria, the largest back – Credit Anstalt – fell victim to the Depression and collapsed, despite the Austrian governments attempts to follow a sensible course of action. This in turn caused a financial crisis across Europe.
The German banks struggled as 40% of their foreign debt was to American banks, although thanks to US President Hoover enacting a temporary halt on German repayments, they were able to survive the crisis, although not without significant rises in unemployment and civil unrest across Germany. Many of its population were unhappy with how the ruling Weimar government was dealing with the crisis.
The Bank Of England devalued the pound and left the Gold Standard (the value of a currency was defined in terms of gold, for which the currency could be exchanged), with many of the UK’s trading partners following suit. This helped them to start to recover from the Depression quicker than countries which were still tied to the Gold Standard.
France had considerable gold reserves but were angry that Germany (which owed them reparations as agreed at the Treaty of Versailles) might use this as an excuse to stop payments altogether. It therefore attached political demands to any financial actions it might take to alleviate the crisis.

Tenant purchase borrowers by their shack, Puerto Rico.

Library of Congress

By 1933, four years after the Wall Street Crash, international trade was one third of what it was before the Crash. Goods being imported from Europe declined greatly between 1929 and 1932, with a drop in value from $1.3 billion to $390 million.

Exports to Europe also dropped too, from $2.3 billion to $784 million during the same period. Automobile sales declined to below the levels of 1928 and Between 13 million and 15 million Americans were unemployed (about 11%-13% of the population) at the peak of the Great Depression in 1933.

Although by the 1930’s interest rates had started to drop, the continuing – and understandable – reluctance of people to borrow or spend money meant that recovery was slow.

A young boy takes a break from digging for coal on the snowy roadside in Scott's Run, W.Va. The photographer noted that the child was barefoot and seemed to be used to it. Circa 1937.

Wikimedia Commons; Ryan Stennes

Boys sitting on a truck parked at the FSA labor camp, Robstown, Texas, USA.

Library of Congress

The end

Ironically, it was another catastrophic global event – albeit of a different nature – which helped finally end the Great Depression. The outbreak of the Second World War forced governments to finance the war effort which in turn, increased government spending, and was financed through increased taxes and borrowing. Unemployment was greatly reduced, simply due to so many men now finding themselves serving in the military and GDP spending rose with increases in military expenditure. Experts have different views on whether it was the start or finish of World War Two that actually marked the end of the Depression, but it is clear that the outbreak of worldwide hostilities had an enormous impact.

Comparison with the 'Great Recession' of 2007

The Great Depression is often compared - particularly in the USA - with the Great Recession of 2007, which saw a similarly widespread and damaging impact on the US economy. This infographic helps highlight the similarities between the two, but also helps the reader understand just how catastrophic the Great Depression was.