Great Depression Warning: You are not logged in. Your IP address will be publicly visible if you make any edits. If you log in or create an account, your edits will be attributed to your username, along with other benefits.Anti-spam check. Do not fill this in! ===United States=== {{Main|Great Depression in the United States|The New Deal}} [[File:Unemployed men queued outside a depression soup kitchen opened in Chicago by Al Capone, 02-1931 - NARA - 541927.jpg|thumb|Unemployed men standing in line outside a depression soup kitchen in Chicago, 1931]] Hoover's first measures to combat the depression were based on encouraging businesses not to reduce their workforce or cut wages but businesses had little choice: wages were reduced, workers were laid off, and investments postponed.<ref name="Peter Clemens 1954, p. 114">Peter Clemens, ''Prosperity, Depression and the New Deal: The USA 1890–1954'', Hodder Education, 4. Auflage, 2008, {{ISBN|978-0-340-96588-7}}, p. 114.</ref><ref>Charles R. Morris, ''A Rabble of Dead Money: The Great Crash and the Global Depression: 1929–1939'' (PublicAffairs, 2017), 389 pp. [https://www.nytimes.com/2017/04/21/books/review/rabble-of-dead-money-charles-r-morris-great-depression-wall-street.html online review] {{Webarchive|url=https://web.archive.org/web/20170424184720/https://www.nytimes.com/2017/04/21/books/review/rabble-of-dead-money-charles-r-morris-great-depression-wall-street.html |date=April 24, 2017 }}</ref> In June 1930, Congress approved the [[Smoot–Hawley Tariff Act]] which raised tariffs on thousands of imported items. The intent of the Act was to encourage the purchase of American-made products by increasing the cost of imported goods, while raising revenue for the federal government and protecting farmers. Most countries that traded with the U.S. increased tariffs on American-made goods in retaliation, reducing international trade, and worsening the Depression.<ref>[https://future.state.gov/when/timeline/1921_timeline/smoot_tariff.html "Smoot-Hawley Tariff"] {{webarchive|url=https://web.archive.org/web/20090312055958/https://future.state.gov/when/timeline/1921_timeline/smoot_tariff.html |date=March 12, 2009 }}, ''U.S. Department of State''.</ref> In 1931, Hoover urged bankers to set up the [[National Credit Corporation]]<ref>{{cite encyclopedia|url=https://eh.net/encyclopedia/article/butkiewicz.finance.corp.reconstruction |title=Reconstruction Finance Corporation|encyclopedia=EH.net Encyclopedia|archive-url=https://web.archive.org/web/20131029205418/https://eh.net/encyclopedia/article/butkiewicz.finance.corp.reconstruction |archive-date=October 29, 2013 }}</ref> so that big banks could help failing banks survive. But bankers were reluctant to invest in failing banks, and the National Credit Corporation did almost nothing to address the problem.<ref>Clemens, ''Prosperity, Depression and the New Deal'', 2008, p. 113.</ref> [[File:evictbonusarmy.jpg|thumb|left|Burning shacks on the Anacostia flats, Washington, D.C., put up by the [[Bonus Army]] (World War I veterans) after the marchers with their wives and children were driven out by the regular Army by order of [[Herbert Hoover|President Hoover]], 1932<ref>[https://www.nps.gov/archive/elro/glossary/great-depression.htm The Great Depression (1929–1939)], The Eleanor Roosevelt Papers. {{webarchive |url=https://web.archive.org/web/20081223191011/https://www.nps.gov/archive/elro/glossary/great-depression.htm |date=December 23, 2008 }}</ref>]] By 1932, unemployment had reached 23.6%, peaking in early 1933 at 25%.<ref>{{cite journal |last1= Swanson |first1= Joseph | last2 = Williamson |first2= Samuel |year= 1972 |title = Estimates of national product and income for the United States economy, 1919–1941 |journal= Explorations in Economic History |volume= 10 |pages= 53–73 |doi = 10.1016/0014-4983(72)90003-4 }}</ref> Those releasing from prison during this period had an especially difficult time finding employment given the stigma of their criminal records, which often led to recidivism out of economic desperation.<ref name="PDN2"/> Drought persisted in the agricultural heartland, businesses and families defaulted on record numbers of loans, and more than 5,000 banks had failed.<ref>[https://encarta.msn.com/encyclopedia_761584403/great_depression_in_the_united_states.html "Great Depression in the United States"] {{Webarchive|url=https://web.archive.org/web/20091028014002/http://encarta.msn.com/encyclopedia_761584403/Great_Depression_in_the_United_States.html |date=October 28, 2009 }}, ''Microsoft Encarta''. [https://web.archive.org/web/20091028014002/http://encarta.msn.com/encyclopedia_761584403/Great_Depression_in_the_United_States.html Archived] October 31, 2009.</ref> Hundreds of thousands of Americans found themselves homeless, and began congregating in [[shanty town]]s – dubbed "[[Hooverville]]s" – that began to appear across the country.<ref>Joyce Bryant, [https://www.yale.edu/ynhti/curriculum/units/1998/4/98.04.04.x.html "The Great Depression and New Deal"] {{Webarchive|url=https://web.archive.org/web/20160721191938/http://www.yale.edu/ynhti/curriculum/units/1998/4/98.04.04.x.html |date=July 21, 2016 }}, ''Yale-New Haven Teachers Institute''.</ref> In response, President Hoover and Congress approved the [[Federal Home Loan Bank Act]], to spur new home construction, and reduce foreclosures. The final attempt of the Hoover Administration to stimulate the economy was the passage of the [[Emergency Relief and Construction Act]] (ERA) which included funds for [[public works]] programs such as dams and the creation of the [[Reconstruction Finance Corporation]] (RFC) in 1932. The Reconstruction Finance Corporation was a Federal agency with the authority to lend up to $2 billion to rescue banks and restore confidence in financial institutions. But $2 billion was not enough to save all the banks, and [[bank run]]s and bank failures continued.<ref name="Peter Clemens 1954, p. 114"/> Quarter by quarter the economy went downhill, as prices, profits and employment fell, leading to the [[Realigning election|political realignment]] in 1932 that brought to power [[Franklin Delano Roosevelt]]. [[File:Dust Bowl - Dallas, South Dakota 1936.jpg|thumb|Buried machinery in a barn lot; [[South Dakota]], May 1936. The [[Dust Bowl]] on the Great Plains coincided with the Great Depression.<ref>[https://eh.net/encyclopedia/article/Cunfer.DustBowl The Dust Bowl], Geoff Cunfer, Southwest Minnesota State University. {{webarchive |url=https://web.archive.org/web/20081228070418/https://eh.net/encyclopedia/article/Cunfer.DustBowl |date=December 28, 2008 }}</ref>]] Shortly after President [[Franklin Delano Roosevelt]] was inaugurated in 1933, drought and erosion combined to cause the [[Dust Bowl]], shifting hundreds of thousands of [[displaced persons]] off their farms in the Midwest. From his inauguration onward, Roosevelt argued that restructuring of the economy would be needed to prevent another depression or avoid prolonging the current one. New Deal programs sought to stimulate [[demand]] and provide work and relief for the impoverished through increased government spending and the institution of financial reforms. During a "bank holiday" that lasted five days, the [[Emergency Banking Act]] was signed into law. It provided for a system of reopening sound banks under [[United States Department of Treasury|Treasury]] supervision, with federal loans available if needed. The [[Securities Act of 1933]] comprehensively regulated the securities industry. This was followed by the [[Securities Exchange Act of 1934]] which created the [[Securities and Exchange Commission]]. Although amended, key provisions of both Acts are still in force. Federal insurance of [[Deposit account|bank deposits]] was provided by the [[Federal Deposit Insurance Corporation|FDIC]], and the [[Glass–Steagall Act]]. The [[Agricultural Adjustment Act]] provided incentives to cut farm production in order to raise farming prices. The [[National Recovery Administration]] (NRA) made a number of sweeping changes to the American economy. It forced businesses to work with government to set price codes through the NRA to fight [[deflation]]ary "cut-throat competition" by the setting of minimum prices and [[Minimum wage|wages]], labor standards, and competitive conditions in all industries. It encouraged unions that would raise wages, to increase the [[purchasing power]] of the [[working class]]. The NRA [[Schechter v. United States|was deemed unconstitutional]] by the [[Supreme Court of the United States]] in 1935. [[File:Civilian Conservation Corps - NARA - 195832.jpg|thumb|left|[[Civilian Conservation Corps|CCC]] workers constructing drainage culvert, 1933. Over 3 million unemployed young men were taken out of the cities and placed into 2,600+ work camps managed by the CCC.<ref>{{cite web |url=https://www.nationalparkstraveler.com/2008/09/park-history-spirit-civilian-conservation-corps |title=National Park History: "The Spirit of the Civilian Conservation Corps" |publisher=Nationalparkstraveler.com |access-date=September 4, 2010 |archive-url=https://web.archive.org/web/20100905182850/https://www.nationalparkstraveler.com/2008/09/park-history-spirit-civilian-conservation-corps |archive-date=September 5, 2010 |url-status=dead }}</ref>]] These reforms, together with several other relief and recovery measures, are called the [[First New Deal]]. Economic stimulus was attempted through a new [[Alphabet agencies|alphabet soup of agencies]] set up in 1933 and 1934 and previously extant agencies such as the [[Reconstruction Finance Corporation]]. By 1935, the "[[Second New Deal]]" added [[Social Security (United States)|Social Security]] (which was later considerably extended through the [[Fair Deal]]), a jobs program for the unemployed (the [[Works Progress Administration]], WPA) and, through the [[National Labor Relations Board]], a strong stimulus to the growth of labor unions. In 1929, federal expenditures constituted only 3% of the [[Gross domestic product|GDP]]. The national debt as a proportion of GNP rose under Hoover from 20% to 40%. Roosevelt kept it at 40% until the war began, when it soared to 128%. By 1936, the main [[economic indicator]]s had regained the levels of the late 1920s, except for unemployment, which remained high at 11%, although this was considerably lower than the 25% unemployment rate seen in 1933. In the spring of 1937, American industrial production exceeded that of 1929 and remained level until June 1937. In June 1937, the Roosevelt administration cut spending and increased taxation in an attempt to balance the federal budget.<ref>Robert Goldston, ''The Great Depression'', Fawcett Publications, 1968, p. 228.</ref> The American economy then took a sharp downturn, lasting for 13 months through most of 1938. Industrial production fell almost 30 per cent within a few months and production of [[durable good]]s fell even faster. Unemployment jumped from 14.3% in 1937 to 19.0% in 1938, rising from 5 million to more than 12 million in early 1938.<ref>''Economic Fluctuations'', Maurice W. Lee, Chairman of Economics Dept., Washington State College, published by R.D. Irwin Inc, Homewood, Illinois, 1955, p. 236.</ref> Manufacturing output fell by 37% from the 1937 peak and was back to 1934 levels.<ref>''Business Cycles'', James Arthur Estey, Purdue University, Prentice-Hall, 1950, pp. 22–23 chart.</ref> [[File:Wpa1.JPG|thumb|The [[Works Progress Administration|WPA]] employed 2–3 million at unskilled labor.]] Producers reduced their expenditures on durable goods, and inventories declined, but personal income was only 15% lower than it had been at the peak in 1937. As unemployment rose, consumers' expenditures declined, leading to further cutbacks in production. By May 1938 retail sales began to increase, employment improved, and industrial production turned up after June 1938.<ref>Maurice W. Lee, 1955.</ref> After the recovery from the Recession of 1937–38, conservatives were able to form a bipartisan [[conservative coalition]] to stop further expansion of the New Deal and, when unemployment dropped to 2% in the early 1940s, they abolished WPA, CCC and the PWA relief programs. Social Security remained in place. Between 1933 and 1939, federal expenditure tripled, and Roosevelt's critics charged that he was turning America into a [[Socialism|socialist]] state.<ref>Schlesinger, Jr., Arthur M. ''The Coming of the New Deal: 1933–1935.'' Paperback ed. New York: Houghton Mifflin, 2003 [1958]. {{ISBN|0-618-34086-6}}; Schlesinger, Jr., Arthur M. ''The Politics of Upheaval: 1935–1936.'' Paperback ed. New York: Houghton Mifflin, 2003 [1960]. {{ISBN|0-618-34087-4}}</ref> The Great Depression was a main factor in the implementation of [[social democracy]] and [[planned economy|planned economies]] in European countries after World War II (see [[Marshall Plan]]). [[Keynesianism]] generally remained the most influential economic school in the United States and in parts of Europe until the periods between the 1970s and the 1980s, when [[Milton Friedman]] and other [[neoliberal]] economists formulated and propagated the newly created theories of [[neoliberalism]] and incorporated them into the [[Chicago School of Economics]] as an alternative approach to the study of economics. Neoliberalism went on to challenge the dominance of the Keynesian school of Economics in the mainstream academia and policy-making in the United States, having reached its peak in popularity in the election of the presidency of [[Ronald Reagan]] in the United States, and [[Margaret Thatcher]] in the [[United Kingdom]].<ref>[[Lanny Ebenstein]], ''Milton Friedman: A Biography'' (2007).</ref> Summary: Please note that all contributions to Christianpedia may be edited, altered, or removed by other contributors. 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