Great Depression

== Course ==
[[File:Crowd outside nyse.jpg|thumb|Crowd gathering at the intersection of [[Wall Street]] and Broad Street after the [[Wall Street Crash of 1929|1929 crash]]]]

=== Origins ===
Because the Great Depression began in the United States and then spread around the world, the origins of the Great Depression are examined in the context of the United States economy. In the aftermath of [[World War I]], the [[Roaring Twenties]] had brought considerable wealth to the United States and Western Europe.<ref name="Soule-1947">George H. Soule, ''Prosperity Decade: From War to Depression: 1917–1929'' (1947)</ref> The year 1929 dawned with considerable economic progress in the American economy. A small stock crash occurred on 25 March 1929, but the crash was stabilized. Despite signs of economic trouble, the market continued to improve through September. Stock prices began to slump in September, and were volatile at the end of September.<ref name="pbsstock2">{{cite web |title=Timeline: A selected Wall Street chronology |url=https://www.pbs.org/wgbh/amex/crash/timeline/timeline2.html |url-status=dead |archive-url=https://web.archive.org/web/20080923040829/http://www.pbs.org/wgbh/amex/crash/timeline/timeline2.html |archive-date=September 23, 2008 |access-date=September 30, 2008 |publisher=[[Public Broadcasting Service|PBS]]}}</ref> A large sell-off of stocks began in mid-October. Finally, on 24 October, [[Wall Street Crash of 1929|Black Thursday]], the American stock market crashed 11% at the opening bell. Actions to stabilize the market failed, and on 28 October, Black Monday, the market crashed another 12%. The panic peaked the next day on Black Tuesday, when the market saw another 11% drop.<ref name=":02">{{Cite news |last1=Post |first1=Special to Financial |date=October 24, 2011 |title=The Great Crash of 1929, some key dates |language=en-CA |website=Financial Post |url=https://financialpost.com/personal-finance/the-great-crash-of-1929-some-key-dates |access-date=July 22, 2020}}</ref><ref name=":4">{{cite web |author=<!--ET Bureau--> |date=October 22, 2017 |title=Market crash of 1929: Some facts of the economic downturn |url=https://economictimes.indiatimes.com/industry/miscellaneous/market-crash-of-1929-some-facts-of-the-economic-downturn/articleshow/61166918.cms |access-date=February 16, 2019 |work=Economic Times |publisher=Times Inernet}}</ref> Thousands of investors were ruined, and billions of dollars had been lost; many stocks could not be sold at any price.<ref name=":4" /> The market recovered 12% on Wednesday, but the damage had been done. Though the market recovered from 14 November until 17 April 1930, the market entered a prolonged slump. From 17 April 1930 until 8 July 1932, the market lost 89% of its value.<ref>According to the Federal Reserve Bank of St. Louis Economic Data website, based on a monthly timeseries 1929 September – 1932 June, the Dow Jones Industrial Average lost 87.1% while the Cowles Commission and S&P's all stock index lost 85.0%: https://fred.stlouisfed.org/graph/?g=qj2m , https://fred.stlouisfed.org/graph/?g=qj2l.</ref>[[File:Bank of the United States failure NYWTS.jpg|thumb|upright=1.2|Crowds outside the [[Bank of United States]] in New York after its failure in 1931]]Despite the crash, the worst of the crisis did not reverberate around the world until after 1929. The crisis hit panic levels again in December 1930, with a [[bank run]] on the [[Bank of United States]] (privately run, no relation to the government). Unable to pay out to all of its creditors, the bank failed.<ref>{{Cite journal |last=Gordon |first=John Steele |date=November–December 2018 |title=The Bank of United States |url=https://www.proquest.com/docview/2160290916 |journal=ABA Banking Journal |volume=110 |issue=6 |pages=58 |id={{ProQuest|2160290916}}}}</ref><ref>{{Cite journal |last=Calomiris |first=Charles W. |date=November 2007 |title=Bank Failures in Theory and History: The Great Depression and Other "Contagious" Events |url=https://www.nber.org/papers/w13597 |journal=National Bureau of Economic Research|series=Working Paper Series |doi=10.3386/w13597 |s2cid=154123748 |doi-access=free }}</ref> Among the 608 American banks that closed in November and December 1930, the Bank of United States accounted for a third of the total $550 million deposits lost and, with its closure, bank failures reached a critical mass.<ref>{{Citation |last=Ferguson |first=Niall |title=The Ascent of Money |date=October 2009 |pages=163 |publisher=Penguin |isbn=978-986-173-584-9}}</ref>

=== The Smoot–Hawley act and the breakdown of international trade ===
{{Main|Smoot–Hawley Tariff Act}}
[[File:Smoot_and_Hawley_standing_together,_April_11,_1929.jpg|thumb|left|[[Willis C. Hawley]] (left) and [[Reed Smoot]] in April 1929, shortly before the Smoot–Hawley Tariff Act passed the House of Representatives]]
The [[Smoot–Hawley Tariff Act]] was passed in the United States on 17 June 1930, having been proposed the year prior. Ostensibly aimed at protecting the American economy as the Depression began to take root, it backfired enormously and may have even caused the Depression. The consensus view among economists and economic historians (including Keynesians, Monetarists and Austrian economists) is that the passage of the Smoot–Hawley Tariff exacerbated the Great Depression,<ref>{{Cite journal |last=Whaples |first=Robert |author-link=Robert Whaples |date=March 1995 |title=Where Is There Consensus Among American Economic Historians? The Results of a Survey on Forty Propositions |journal=[[The Journal of Economic History]] |publisher=[[Cambridge University Press]] |volume=55 |issue=1 |page=144 |doi=10.1017/S0022050700040602 |jstor=2123771 |s2cid=145691938}}</ref> although there is disagreement as to how much. In the popular view, the Smoot–Hawley Tariff was a leading cause of the depression.<ref>[https://krugman.blogs.nytimes.com/2009/11/30/protectionism-and-the-great-depression/ "Protectionism and the Great Depression"] {{Webarchive|url=https://web.archive.org/web/20210225033620/https://krugman.blogs.nytimes.com/2009/11/30/protectionism-and-the-great-depression/|date=February 25, 2021}}, [[Paul Krugman]], ''[[New York Times]],'' November 30, 2009</ref><ref name="eichenirwin">Barry Eichengreen, Douglas Irwin (March 17, 2009). [https://voxeu.org/index.php?q=node/3280 "The protectionist temptation: Lessons from the Great Depression for today"] {{Webarchive|url=https://web.archive.org/web/20120524215509/http://voxeu.org/index.php?q=node%2F3280|date=May 24, 2012}}. VOX.</ref> In a 1995 survey of American economic historians, two-thirds agreed that the [[Smoot–Hawley Tariff Act]] at least worsened the Great Depression.<ref name="ReferenceB" /> According to the U.S. Senate website, the Smoot–Hawley Tariff Act is among the most catastrophic acts in congressional history.<ref name="Senate_On_Smoot-Hawley Act">{{cite web |title=The Senate Passes the Smoot-Hawley Tariff |url=https://www.senate.gov/artandhistory/history/minute/Senate_Passes_Smoot_Hawley_Tariff.htm |url-status=live |archive-url=https://web.archive.org/web/20211020163037/https://www.senate.gov/artandhistory/history/minute/Senate_Passes_Smoot_Hawley_Tariff.htm |archive-date=October 20, 2021 |access-date=May 3, 2020 |website=United States Senate }}</ref>

Many economists have argued that the sharp decline in international trade after 1930 helped to worsen the depression, especially for countries significantly dependent on foreign trade.  Most historians and economists blame the Act for worsening the depression by seriously reducing international trade and causing retaliatory tariffs in other countries. While foreign trade was a small part of overall economic activity in the U.S. and was concentrated in a few businesses like farming, it was a much larger factor in many other countries.<ref>{{cite web |title=The World in Depression |url=https://www.mtholyoke.edu/acad/intrel/depress.htm |url-status=dead |archive-url=https://web.archive.org/web/20080310145946/https://www.mtholyoke.edu/acad/intrel/depress.htm |archive-date=March 10, 2008 |access-date=May 22, 2008 |publisher=[[Mount Holyoke College]]}}</ref> The average ''[[ad valorem]]'' (value based) rate of duties on dutiable imports for 1921–1925 was 25.9% but under the new tariff it jumped to 50% during 1931–1935. In dollar terms, American exports declined over the next four years from about $5.2&nbsp;billion in 1929 to $1.7&nbsp;billion in 1933; so, not only did the physical volume of exports fall, but also the prices fell by about {{frac|1|3}} as written. Hardest hit were farm commodities such as wheat, cotton, tobacco, and lumber.{{Citation needed|date=October 2022}}

Governments around the world took various steps into spending less money on foreign goods such as: "imposing tariffs, import quotas, and exchange controls". These restrictions triggered much tension among countries that had large amounts of bilateral trade, causing major export-import reductions during the depression. Not all governments enforced the same measures of protectionism. Some countries raised tariffs drastically and enforced severe restrictions on foreign exchange transactions, while other countries reduced "trade and exchange restrictions only marginally":<ref name="Eichengreen">{{cite journal |last1=Eichengreen |first1=B. |last2=Irwin |first2=D. A. |year=2010 |title=The Slide to Protectionism in the Great Depression: Who Succumbed and Why? |url=https://www.nber.org/papers/w15142.pdf |url-status=live |journal=Journal of Economic History |volume=70 |issue=4 |pages=871–897 |doi=10.1017/s0022050710000756 |archive-url=https://web.archive.org/web/20190514111715/https://www.nber.org/papers/w15142.pdf |archive-date=May 14, 2019 |access-date=February 18, 2022 |s2cid=18906612}}</ref>
* "Countries that remained on the gold standard, keeping currencies fixed, were more likely to restrict foreign trade." These countries "resorted to protectionist policies to strengthen the [[balance of payments]] and limit gold losses." They hoped that these restrictions and depletions would hold the economic decline.<ref name="Eichengreen" />
* Countries that abandoned the gold standard allowed their currencies to [[Currency appreciation and depreciation|depreciate]] which caused their balance of payments to strengthen. It also freed up monetary policy so that central banks could lower interest rates and act as lenders of last resort. They possessed the best policy instruments to fight the Depression and did not need protectionism.<ref name="Eichengreen" />
* "The length and depth of a country's economic downturn and the timing and vigor of its recovery are related to how long it remained on the [[gold standard]]. Countries abandoning the gold standard relatively early experienced relatively mild recessions and early recoveries. In contrast, countries remaining on the gold standard experienced prolonged slumps."<ref name="Eichengreen" />

=== The gold standard and the spreading of global depression ===
The [[gold standard]] was the primary transmission mechanism of the Great Depression. Even countries that did not face bank failures and a monetary contraction first-hand were forced to join the deflationary policy since higher interest rates in countries that performed a deflationary policy led to a gold outflow in countries with lower interest rates. Under the gold standard's [[price–specie flow mechanism]], countries that lost gold but nevertheless wanted to maintain the gold standard had to permit their money supply to decrease and the domestic price level to decline ([[deflation]]).<ref>Peter Temin, Gianni Toniolo, ''The World Economy between the Wars'', Oxford University Press, 2008, {{ISBN|978-0-19-804201-3}}, p. 106</ref><ref>Randall E. Parker, ''Reflections on the Great Depression'', Elgar publishing, 2003, {{ISBN|978-1-84376-335-2}}, p. 22.</ref>

There is also consensus that protectionist policies, and primarily the passage of the [[Smoot–Hawley Tariff Act]], helped to exacerbate, or even cause the Great Depression.<ref name="ReferenceB">{{Cite journal |last1=Whaples |first1=Robert |year=1995 |title=Where is There Consensus Among American Economic Historians? The Results of a Survey on Forty Propositions |journal=The Journal of Economic History |volume=55 |issue=1 |pages=139–154 |doi=10.1017/S0022050700040602 |jstor=2123771 |s2cid=145691938}}</ref>

==== Gold standard ====
[[File:Graph charting income per capita throughout the Great Depression.svg|thumb|upright=1.8|The Depression in international perspective<ref>International data from {{cite web |last=Maddison |first=Angus |author-link=Angus Maddison |title=Historical Statistics for the World Economy: 1–2003 AD |url=https://www.ggdc.net/Maddison/Historical_Statistics/}}{{dead link|date=May 2017|bot=InternetArchiveBot|fix-attempted=yes}}. Gold dates culled from historical sources, principally {{Cite book |last=Eichengreen |first=Barry |url=https://archive.org/details/goldenfettersgol00eich |title=Golden Fetters: The Gold Standard and the Great Depression, 1919–1939 |publisher=Oxford University Press |year=1992 |isbn=0-19-506431-3 |location=New York |author-link=Barry Eichengreen}}</ref>]]

Some economic studies have indicated that just as the downturn was spread worldwide by the rigidities of the [[gold standard]], it was suspending gold convertibility (or devaluing the currency in gold terms) that did the most to make recovery possible.<ref>{{Cite book |last=Eichengreen |first=Barry |url=https://archive.org/details/goldenfettersgol00eich |title=Golden Fetters: The Gold Standard and the Great Depression, 1919–1939 |publisher=Oxford University Press |year=1992 |isbn=0-19-506431-3 |location=New York |author-link=Barry Eichengreen}}</ref>

Every major currency left the gold standard during the Great Depression. The UK was the first to do so. Facing [[speculative attack]]s on the [[Pound sterling|pound]] and depleting [[Official gold reserves|gold reserves]], in September 1931 the [[Bank of England]] ceased exchanging pound notes for gold and the pound was floated on foreign exchange markets.

Japan and the Scandinavian countries joined the United Kingdom in leaving the gold standard in 1931. Other countries, such as Italy and the United States, remained on the gold standard into 1932 or 1933, while a few countries in the so-called "gold bloc", led by France and including Poland, Belgium and Switzerland, stayed on the standard until 1935–36.

According to later analysis, the earliness with which a country left the gold standard reliably predicted its economic recovery. For example, The UK and Scandinavia, which left the gold standard in 1931, recovered much earlier than France and Belgium, which remained on gold much longer. Countries such as China, which had a [[silver standard]], almost avoided the depression entirely. The connection between leaving the gold standard as a strong predictor of that country's severity of its depression and the length of time of its recovery has been shown to be consistent for dozens of countries, including [[Developing country|developing countries]]. This partly explains why the experience and length of the depression differed between regions and states around the world.<ref>{{Cite journal |last=Bernanke |first=Ben |date=March 2, 2004 |title=Remarks by Governor Ben S. Bernanke: Money, Gold and the Great Depression |url=https://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm |url-status=live |journal=At the H. Parker Willis Lecture in Economic Policy, Washington and Lee University, Lexington, Virginia |archive-url=https://web.archive.org/web/20220215053205/https://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm |archive-date=February 15, 2022 |access-date=February 18, 2022}}</ref>

==== German banking crisis of 1931 and British crisis ====
The financial crisis escalated out of control in mid-1931, starting with the collapse of the [[Creditanstalt|Credit Anstalt]] in Vienna in May.<ref>[[Charles Loch Mowat]], ''Britain between the wars, 1918–1940'' (1955) pp. 379–385.</ref><ref name="William Ashworth 1962 pp. 237-244">William Ashworth, ''A short history of the international economy since 1850'' (2nd ed. 1962) pp. 237–244.</ref> This put heavy pressure on Germany, which was already in political turmoil. With the rise in violence of Nazi and communist movements, as well as investor nervousness at harsh government financial policies,<ref name="Isabel Schnabel 1931">Isabel Schnabel, "The German twin crisis of 1931". ''Journal of Economic History'' 64#3 (2004): 822–871.</ref> investors withdrew their short-term money from Germany as confidence spiraled downward. The Reichsbank lost 150&nbsp;million marks in the first week of June, 540&nbsp;million in the second, and 150&nbsp;million in two days, 19–20 June. Collapse was at hand. U.S. President Herbert Hoover called for a [[Hoover Moratorium|moratorium on Payment of war reparations]]. This angered Paris, which depended on a steady flow of German payments, but it slowed the crisis down, and the moratorium was agreed to in July 1931. An International conference in London later in July produced no agreements but on August 19 a standstill agreement froze Germany's foreign liabilities for six months. Germany received emergency funding from private banks in New York as well as the Bank of International Settlements and the Bank of England. The funding only slowed the process. Industrial failures began in Germany, a major bank closed in July and a two-day holiday for all German banks was declared. Business failures were more frequent in July, and spread to [[Kingdom of Romania|Romania]] and Hungary. The crisis continued to get worse in Germany, bringing political upheaval that finally led to the [[Adolf Hitler's rise to power|coming to power of Hitler's Nazi regime]] in January 1933.<ref name="V. Hodson, 1938 pp. 64-76">H. V. Hodson (1938), ''Slump and Recovery, 1929–1937'' (London), pp. 64–76.</ref>

The world financial crisis now began to overwhelm Britain; investors around the world started withdrawing their gold from London at the rate of £2.5&nbsp;million per day.<ref name="David Williams 1963">{{cite journal |last1=Williams |first1=David |year=1963 |title=London and the 1931 financial crisis |journal=Economic History Review |volume=15 |issue=3 |pages=513–528 |doi=10.2307/2592922 |jstor=2592922}}</ref> Credits of £25&nbsp;million each from the Bank of France and the Federal Reserve Bank of New York and an issue of £15&nbsp;million fiduciary note slowed, but did not reverse, the British crisis. The financial crisis now caused a major political crisis in Britain in August 1931. With deficits mounting, the bankers demanded a balanced budget; the divided cabinet of Prime Minister Ramsay MacDonald's Labour government agreed; it proposed to raise taxes, cut spending, and most controversially, to cut unemployment benefits 20%. The attack on welfare was unacceptable to the Labour movement. MacDonald wanted to resign, but King George V insisted he remain and form an all-party coalition "[[National Government (United Kingdom)|National Government]]". The Conservative and Liberals parties signed on, along with a small cadre of Labour, but the vast majority of Labour leaders denounced MacDonald as a traitor for leading the new government. Britain went off the [[gold standard]], and suffered relatively less than other major countries in the Great Depression. In the 1931 British election, the Labour Party was virtually destroyed, leaving MacDonald as prime minister for a largely Conservative coalition.<ref>Mowat (1955), ''Britain between the wars, 1918–1940'', pp. 386–412.</ref><ref name="John Oxborrow 1976 pp. 67-73">Sean Glynn and John Oxborrow (1976), ''Interwar Britain : a social and economic history'', pp. 67–73.</ref>

=== Turning point and recovery ===
[[File:GDP depression.svg|thumb|upright=1.8|The overall course of the Depression in the United States, as reflected in per-capita GDP (average income per person) shown in constant year 2000 dollars, plus some of the key events of the period. Dotted red line = long-term trend 1920–1970.<ref name=":0">Per-capita GDP data from [https://www.measuringworth.org/usgdp/ MeasuringWorth: What Was the U.S. GDP Then?] {{Webarchive|url=https://web.archive.org/web/20100904025051/http://www.measuringworth.org/usgdp/|date=September 4, 2010}}</ref>]]

In most countries of the world, recovery from the Great Depression began in 1933.<ref name="Britannica" /> In the U.S., recovery began in early 1933,<ref name="Britannica" /> but the U.S. did not return to 1929 GNP for over a decade and still had an unemployment rate of about 15% in 1940, albeit down from the high of 25% in 1933.

There is no consensus among economists regarding the motive force for the U.S. economic expansion that continued through most of the [[Franklin D. Roosevelt#Presidency (1933–1945)|Roosevelt years]] (and the 1937 recession that interrupted it). The common view among most economists is that Roosevelt's [[New Deal]] policies either caused or accelerated the recovery, although his policies were never aggressive enough to bring the economy completely out of recession. Some economists have also called attention to the positive effects from expectations of [[reflation]] and rising nominal interest rates that Roosevelt's words and actions portended.<ref>Gauti B. Eggertsson, "Great Expectations and the End of the Depression", ''American Economic Review'' 98, No. 4 (September 2008): 1476–1516</ref><ref>"Was the New Deal Contractionary?" [[Federal Reserve Bank of New York]] Staff Report 264, October 2006, [https://www.newyorkfed.org/research/staff_reports/sr264.html Gauti B. Eggertsson] {{Webarchive|url=https://web.archive.org/web/20220212162504/https://www.newyorkfed.org/research/staff_reports/sr264.html|date=February 12, 2022}}</ref> It was the rollback of those same reflationary policies that led to the interruption of a recession beginning in late 1937.<ref>"The Mistake of 1937: A General Equilibrium Analysis", ''Monetary and Economic Studies'' 24, No. S-1 (December 2006), [https://www.imes.boj.or.jp/english/publication/mes/2006/abst/me24-s1-8.html Boj.or.jp] {{Webarchive|url=https://web.archive.org/web/20150811112759/https://www.imes.boj.or.jp/english/publication/mes/2006/abst/me24-s1-8.html|date=August 11, 2015}}</ref><ref>{{cite journal |last1=Eggertsson |first1=Gauti B. |title=A Reply to Steven Horwitz's Commentary on 'Great Expectations and the End of the Great Depression' |url=https://econjwatch.org/articles/a-reply-to-steven-horwitz-s-commentary-on-great-expectations-and-the-end-of-the-depression- |url-status=live |journal=Econ Journal Watch |volume=7 |issue=3 |pages=197–204 |archive-url=https://web.archive.org/web/20220215053116/https://econjwatch.org/articles/a-reply-to-steven-horwitz-s-commentary-on-great-expectations-and-the-end-of-the-depression- |archive-date=February 15, 2022 |access-date=February 18, 2022}}</ref> One contributing policy that reversed reflation was the [[Banking Act of 1935]], which effectively raised reserve requirements, causing a monetary contraction that helped to thwart the recovery.<ref>Steven Horwitz, "Unfortunately Unfamiliar with Robert Higgs and Others: A Rejoinder to Gauti Eggertsson on the 1930s", ''Econ Journal Watch'' 8(1), 2, January 2011. [https://econjwatch.org/articles/unfortunately-unfamiliar-with-robert-higgs-and-others-a-rejoinder-to-gauti-eggertsson-on-the-1930s] {{Webarchive|url=https://web.archive.org/web/20220215053127/https://econjwatch.org/articles/unfortunately-unfamiliar-with-robert-higgs-and-others-a-rejoinder-to-gauti-eggertsson-on-the-1930s|date=February 15, 2022}}</ref> GDP returned to its upward trend in 1938.<ref name=":0" /> A revisionist view among some economists holds that the New Deal prolonged the Great Depression, as they argue that [[National Industrial Recovery Act of 1933]] and [[National Labor Relations Act of 1935]] restricted competition and established price fixing.<ref>{{Cite journal |last1=Hannsgen |first1=Greg |last2=Papadimitriou |first2=Dimitri |date=2010 |title=Did the New Deal Prolong or Worsen the Great Depression? |url=https://www.jstor.org/stable/40722622 |journal=Challenge |volume=53 |issue=1 |pages=63–86 |doi=10.2753/0577-5132530103 |jstor=40722622 |s2cid=153490746 |issn=0577-5132}}</ref> [[John Maynard Keynes]] did not think that the New Deal under Roosevelt single-handedly ended the Great Depression: "It is, it seems, politically impossible for a capitalistic democracy to organize expenditure on the scale necessary to make the grand experiments which would prove my case—except in war conditions."<ref>Quoted by P. Renshaw. ''Journal of Contemporary History''. 1999 vol. 34 (3). pp. 377–364</ref>

According to [[Christina Romer]], the money supply growth caused by huge international gold inflows was a crucial source of the recovery of the United States economy, and that the economy showed little sign of self-correction. The gold inflows were partly due to [[Executive Order 6102|devaluation of the U.S. dollar]] and partly due to deterioration of the political situation in Europe.<ref>{{Cite journal |last=Romer |first=Christina D. |date=December 1992 |title=What Ended the Great Depression |url=https://elsa.berkeley.edu/~cromer/What%20Ended%20the%20Great%20Depression.pdf |url-status=dead |journal=Journal of Economic History |volume=52 |issue=4 |pages=757–84 |citeseerx=10.1.1.207.844 |doi=10.1017/S002205070001189X |archive-url=https://web.archive.org/web/20130117093624/https://elsa.berkeley.edu/~cromer/What%20Ended%20the%20Great%20Depression.pdf |archive-date=January 17, 2013 |quote=monetary development were crucial to the recovery implies that self-correction played little role in the growth of real output}}</ref> In their book, ''[[A Monetary History of the United States]]'', [[Milton Friedman]] and [[Anna J. Schwartz]] also attributed the recovery to monetary factors, and contended that it was much slowed by poor management of money by the [[Federal Reserve System]]. [[Chairman of the Federal Reserve]] (2006–2014) [[Ben Bernanke]] agreed that monetary factors played important roles both in the worldwide economic decline and eventual recovery.<ref>Ben Bernanke. ''Essays on the Great Depression''. Princeton University Press. {{ISBN|978-0-691-01698-6}}. p. 7</ref> Bernanke also saw a strong role for institutional factors, particularly the rebuilding and restructuring of the financial system,<ref>Ben S. Bernanke, "Nonmonetary Effects of the Financial Crisis in the Propaga-tion of the Great Depression", ''The American Economic Review 73'', No. 3 (June 1983): 257–276, available from the St. Louis Federal Reserve Bank collection at [https://fraser.stlouisfed.org/scribd/?item_id=2348&filepath=/docs/publications/aer/aer_1983_bernanke_nonmonetary_effects.pdf Stlouisfed.org] {{Webarchive|url=https://web.archive.org/web/20160305072448/https://fraser.stlouisfed.org/scribd/?item_id=2348&filepath=%2Fdocs%2Fpublications%2Faer%2Faer_1983_bernanke_nonmonetary_effects.pdf|date=March 5, 2016}}</ref> and pointed out that the Depression should be examined in an international perspective.<ref>{{cite journal |last=Bernanke |first=Ben S. |date=February 1995 |title=The Macroeconomics of the Great Depression: A Comparative Approach |url=https://fraser.stlouisfed.org/scribd/?item_id=2399&filepath=/docs/meltzer/bermac95.pdf |url-status=live |journal=Journal of Money, Credit and Banking |publisher=Fraser.stlouisfed.org |volume=27 |issue=1 |pages=1–28 |doi=10.2307/2077848 |jstor=2077848 |archive-url=https://web.archive.org/web/20160304201917/https://fraser.stlouisfed.org/scribd/?item_id=2399&filepath=%2Fdocs%2Fmeltzer%2Fbermac95.pdf |archive-date=March 4, 2016 |access-date=October 16, 2014}}</ref>

==== Role of women and household economics ====
Women's primary role was as housewives; without a steady flow of family income, their work became much harder in dealing with food and clothing and medical care. Birthrates fell everywhere, as children were postponed until families could financially support them. The average birthrate for 14 major countries fell 12% from 19.3 births per thousand population in 1930, to 17.0 in 1935.<ref>W. S. Woytinsky and E. S. Woytinsky, ''World population and production: trends and outlook'' (1953) p. 148</ref> In Canada, half of Roman Catholic women defied Church teachings and used contraception to postpone births.<ref>Denyse Baillargeon, ''Making Do: Women, Family and Home in Montreal during the Great Depression'' (Wilfrid Laurier University Press, 1999), p. 159.</ref>

Among the few women in the labor force, layoffs were less common in the white-collar jobs and they were typically found in light manufacturing work. However, there was a widespread demand to limit families to one paid job, so that wives might lose employment if their husband was employed.<ref>{{cite book |last=Stephenson |first=Jill |url=https://books.google.com/books?id=-rqOAwAAQBAJ&pg=PA3 |title=Women in Nazi Germany |publisher=Taylor & Francis |year=2014 |isbn=978-1-317-87607-6 |pages=3–5 |access-date=June 27, 2015 |archive-url=https://web.archive.org/web/20210816172022/https://books.google.com/books?id=-rqOAwAAQBAJ&pg=PA3 |archive-date=August 16, 2021 |url-status=live}}</ref><ref>{{cite book |author=Susan K. Foley |url=https://archive.org/details/womeninfrancesin00fole |title=Women in France Since 1789: The Meanings of Difference |publisher=Palgrave Macmillan |year=2004 |isbn=978-0-230-80214-8 |pages=[https://archive.org/details/womeninfrancesin00fole/page/186 186]–90 |author-link1=Susan Foley |url-access=registration}}</ref><ref>{{cite book |last=Srigley |first=Katrina |url=https://archive.org/details/breadwinningdaug00srig |title=Breadwinning Daughters: Young Working Women in a Depression-era City, 1929–1939 |publisher=University of Toronto Press |year=2010 |isbn=978-1-4426-1003-3 |page=[https://archive.org/details/breadwinningdaug00srig/page/135 135] |url-access=registration}}</ref> Across Britain, there was a tendency for married women to join the labor force, competing for part-time jobs especially.<ref>Jessica S. Bean, {{"'}}To help keep the home going': female labour supply in interwar London". ''Economic History Review'' (2015) 68#2 pp. 441–470.</ref><ref>Deirdre Beddoe, ''Back to Home and Duty: Women Between the Wars, 1918–1939'' (1989).</ref>

In France, very slow population growth, especially in comparison to Germany continued to be a serious issue in the 1930s. Support for increasing welfare programs during the depression included a focus on women in the family. The Conseil Supérieur de la Natalité campaigned for provisions enacted in the Code de la Famille (1939) that increased state assistance to families with children and required employers to protect the jobs of fathers, even if they were immigrants.<ref>{{cite journal |last1=Camiscioli |first1=Elisa |author-link=Elisa Camiscioli |year=2001 |title=Producing Citizens, Reproducing the 'French Race': Immigration, Demography, and Pronatalism in Early Twentieth-Century France |journal=Gender & History |volume=13 |issue=3 |pages=593–621 |doi=10.1111/1468-0424.00245 |pmid=18198513 |s2cid=20333294}}</ref>

In rural and small-town areas, women expanded their operation of vegetable gardens to include as much food production as possible. In the United States, agricultural organizations sponsored programs to teach housewives how to optimize their gardens and to raise poultry for meat and eggs.<ref>Ann E. McCleary, {{"'}}I Was Really Proud of Them': Canned Raspberries and Home Production During the Farm Depression". ''Augusta Historical Bulletin'' (2010), Issue 46, pp. 14–44.</ref> Rural women made [[feed sack dress]]es and other items for themselves and their families and homes from feed sacks.<ref>{{Cite web |last=Vogelsang |first=Willem |title=3. Feedsacks and the Great Depression |url=https://trc-leiden.nl/trc-digital-exhibition/index.php/for-a-few-sacks-more/item/119-3-feedsacks-and-the-great-depression |url-status=live |archive-url=https://web.archive.org/web/20210415092351/https://trc-leiden.nl/trc-digital-exhibition/index.php/for-a-few-sacks-more/item/119-3-feedsacks-and-the-great-depression |archive-date=April 15, 2021 |access-date=March 21, 2020 |website=trc-leiden.nl |language=en-gb}}</ref> In American cities, African American women quiltmakers enlarged their activities, promoted collaboration, and trained neophytes. Quilts were created for practical use from various inexpensive materials and increased social interaction for women and promoted camaraderie and personal fulfillment.<ref>{{cite journal |last1=Klassen |first1=Tari |year=2008 |title=How Depression-Era Quiltmakers Constructed Domestic Space: An Interracial Processual Study |journal=Midwestern Folklore |volume=34 |issue=2 |pages=17–47}}</ref>

Oral history provides evidence for how housewives in a modern industrial city handled shortages of money and resources. Often they updated strategies their mothers used when they were growing up in poor families. Cheap foods were used, such as soups, beans and noodles. They purchased the cheapest cuts of meat—sometimes even horse meat—and recycled the [[Sunday roast]] into sandwiches and soups. They sewed and patched clothing, traded with their neighbors for outgrown items, and made do with colder homes. New furniture and appliances were postponed until better days. Many women also worked outside the home, or took boarders, did laundry for trade or cash, and did sewing for neighbors in exchange for something they could offer. Extended families used mutual aid—extra food, spare rooms, repair-work, cash loans—to help cousins and in-laws.<ref>Baillargeon, ''Making Do: Women, Family and Home in Montreal during the Great Depression'' (1999), pp. 70, 108, 136–138, 159.</ref>

In Japan, official government policy was deflationary and the opposite of Keynesian spending. Consequently, the government launched a campaign across the country to induce households to reduce their consumption, focusing attention on spending by housewives.<ref>{{cite journal |last1=Metzler |first1=Mark |year=2004 |title=Woman's Place in Japan's Great Depression: Reflections on the Moral Economy of Deflation |journal=Journal of Japanese Studies |volume=30 |issue=2 |pages=315–352 |doi=10.1353/jjs.2004.0045 |s2cid=146273711}}</ref>

In Germany, the government tried to reshape private household consumption under the Four-Year Plan of 1936 to achieve German economic self-sufficiency. The Nazi women's organizations, other propaganda agencies and the authorities all attempted to shape such consumption as economic self-sufficiency was needed to prepare for and to sustain the coming war. The organizations, propaganda agencies and authorities employed slogans that called up traditional values of thrift and healthy living. However, these efforts were only partly successful in changing the behavior of housewives.<ref>{{cite journal |last1=Reagin |first1=N. R. |year=2001 |title=Marktordnung and Autarkic Housekeeping: Housewives and Private Consumption under the Four-Year Plan, 1936–1939 |journal=German History |volume=19 |issue=2 |pages=162–184 |doi=10.1191/026635501678771619 |pmid=19610237}}</ref>

==== World War II and recovery ====
[[File:WomanFactory1940s.jpg|thumb|A female factory worker in 1942, [[Fort Worth, Texas]]. Women entered the workforce as men were drafted into the armed forces.]]
The common view among economic historians is that the Great Depression ended with the advent of [[World War II]]. Many economists believe that government spending on the war caused or at least accelerated recovery from the Great Depression, though some consider that it did not play a very large role in the recovery, though it did help in reducing unemployment.<ref name="Britannica" /><ref name="Galbraith">Referring to the effect of World War II spending on the economy, economist [[John Kenneth Galbraith]] said, "One could not have had a better demonstration of the Keynesian ideas." {{cite video |url=https://www.pbs.org/wgbh/commandingheights/lo/story/ch_menu.html |title=Commanding Heights, see chapter 6 video or transcript |date=2002 |medium=TV documentary |publisher=[[Public Broadcasting Service|PBS]] |location=U.S. |people=[[Daniel Yergin]], William Cran (writers / producer)}}</ref><ref>{{Cite journal |last=Romer |first=Christina D. |author-link=Christina Romer |year=1992 |title=What Ended the Great Depression? |journal=Journal of Economic History |volume=52 |issue=4 |pages=757–784 |doi=10.1017/S002205070001189X |quote=fiscal policy was of little consequence even as late as 1942, suggests an interesting twist on the usual view that World War II caused, or at least accelerated, the recovery from the Great Depression.}}</ref><ref>{{Cite journal |last=Higgs |first=Robert |date=March 1, 1992 |title=Wartime Prosperity? A Reassessment of the U.S. Economy in the 1940s |journal=The Journal of Economic History |volume=52 |issue=1 |pages=41–60 |doi=10.1017/S0022050700010251 |issn=1471-6372 |s2cid=154484756}}</ref>

The rearmament policies leading up to World War II helped stimulate the economies of Europe in 1937–1939. By 1937, unemployment in Britain had fallen to 1.5&nbsp;million. The [[mobilization]] of manpower following the outbreak of war in 1939 ended unemployment.<ref name="Great Depression and World War II">[https://www.americaslibrary.gov/jb/wwii/jb_wwii_subj.html "Great Depression and World War II"] {{Webarchive|url=https://web.archive.org/web/20220124140816/https://www.americaslibrary.gov/jb/wwii/jb_wwii_subj.html|date=January 24, 2022}}. Library of Congress.</ref>

The American mobilization for [[World War II]] at the end of 1941 moved approximately ten million people out of the civilian labor force and into the war.<ref>Selective Service System. (May 27, 2003). ''[http://www.sss.gov/induct.htm Induction Statistics. In Inductions (by year) from World War&nbsp;I Through the End of the Draft (1973)] {{Webarchive|url=https://web.archive.org/web/20090507211238/http://www.sss.gov/induct.htm |date=May 7, 2009 }}''. Retrieved September 8, 2013.</ref>
This finally eliminated the last effects from the Great Depression and brought the U.S. unemployment rate down below 10%.<ref name="Depression & World War II">[https://www.americaslibrary.gov/cgi-bin/page.cgi/jb/wwii "Depression & WWII"] {{webarchive|url=https://web.archive.org/web/20090625204217/https://www.americaslibrary.gov/cgi-bin/page.cgi/jb/wwii|date=June 25, 2009}}. Americaslibrary.gov.</ref>

World War II had a dramatic effect on many parts of the  American economy.<ref name="Bloomberg">{{cite news|url=http://www.bloombergview.com/articles/2011-12-16/how-did-world-war-ii-end-the-great-depression-echoes|publisher=Bloomberg|title=How Did World War II End the Great Depression?: Echoes|author=Hyman, Louis|author-link=Louis Hyman|date=December 16, 2011|access-date=August 25, 2015|archive-date=May 3, 2016|archive-url=https://web.archive.org/web/20160503051054/http://www.bloombergview.com/articles/2011-12-16/how-did-world-war-ii-end-the-great-depression-echoes|url-status=dead}}</ref> Government-financed capital spending accounted for only 5% of the annual U.S. investment in industrial capital in 1940; by 1943, the government accounted for 67% of U.S. capital investment.<ref name="Bloomberg"/> The massive war spending doubled economic growth rates, either masking the effects of the Depression or essentially ending the Depression. Businessmen ignored the mounting [[National debt of the United States|national debt]] and heavy new taxes, redoubling their efforts for greater output to take advantage of generous government contracts.<ref>Richard J. Jensen, [https://rjensen.people.uic.edu/causes-cures.pdf "The causes and cures of unemployment in the Great Depression"] {{Webarchive|url=https://web.archive.org/web/20211102124644/https://rjensen.people.uic.edu/causes-cures.pdf|date=November 2, 2021}}. ''Journal of Interdisciplinary History'' 19.4 (1989): 553–583.</ref>