It is now becoming increasingly clear that COVID-19 and the way COVID-19 was dealt with on a global level will have a far-reaching impact on the US economy. The question of whether we’ll get out of this recession sooner than later is on everyone’s mind, and perhaps this is the moment turning to history can shed some light on the current situation.
America has gone through several trying periods of poverty and way too many crises to count, but our country has emerged victorious in the end. To discern the possible paths of recovery, we’ll look at the period of the Great Depression, examine what led to the downfall, the aftershocks, and ultimately, how the economy rebounded. Hopefully, there’s a lesson to be learned here.
The Stock Market Crash of 1929
The stock market crash of 1929 was one of the most catastrophic events in American history. It signaled the beginning of the Great Depression, a period characterized by widespread unemployment and poverty. The crash happened on October 29, 1929, when the stock market plunged sharply after a period of sustained growth.
In the following weeks, panic selling drove prices even lower, and by November 13, the Dow Jones Industrial Average had lost nearly 25% of its value. The effects of the crash were felt across the country, as businesses failed and millions of workers lost their jobs.
The Great Depression was the longest and most severe depression ever experienced by the industrialized Western world. It lasted for a decade and caused a severe worldwide economic downturn.
The Effects of the Depression on Citizens’ Everyday Lives
The effects of the Depression were felt by all sectors of society, but some groups were hit harder than others. Poor farmers saw their incomes plummet as crop prices fell, while factory workers found themselves out of work as businesses closed their doors. African Americans and other minorities were especially hard hit, as they were often the first to be laid off and experienced higher rates of eviction and homelessness.
The Great Depression was a dark time for America. Unemployment reached 25%, and millions of people were left homeless and without the means to support their families. The experience of the Depression taught Americans the importance of government intervention in the economy and led to the creation of several social welfare programs, such as Social Security and unemployment insurance. The Great Depression also ushered in a new era of American politics, as Franklin Roosevelt’s New Deal Coalition transformed the Democratic Party into the dominant force in American politics.
How America Ended the Great Depression
In response to the Depression, the federal government created a number of programs designed to help people get back on their feet. One of the most famous is the Social Security program, which provides financial assistance to retirees and those with disabilities. The government also established the Federal Deposit Insurance Corporation, which protects bank deposits, and the Securities and Exchange Commission, which regulates the stock market.
Roosevelt’s New Deal
In 1933, Franklin Roosevelt was elected president, and he immediately set to work on getting the economy back on track. One of his first actions was to establish the New Deal, which included everything from infrastructure projects to financial reforms to relief programs for farmers and the unemployed.
Roosevelt also instituted programs like the Civilian Conservation Corps, which put people to work on projects like planting trees and building roads.
While the New Deal didn’t end the Great Depression, it did help to ease the worst effects of the economic downturn and put the country on a path to recovery. It remains one of the most consequential pieces of legislation in American history.
The US Enters WWII
The New Deal alone was not enough to pull America out of the Depression. The country’s entry into World War II was another important step in ending the period of economic downturn and stagnation. It created a demand for goods and services, leading to an increase in production. Finally, the G.I. Bill, officially known as The Servicemen’s Readjustment Act of 1944, provided returning soldiers with financial assistance for education and housing, helping them to become productive members of society.
However, it would be inaccurate to say that the Great Depression simply ended with the onset of World War II. In reality, the country continued to experience high levels of unemployment and poverty throughout the war years. It was not until the postwar boom of the 1950s that the US finally regained its economic footing.
Lessons Learned from the Great Depression
The Great Depression taught Americans several important lessons about managing their personal finances. One is that it’s important to have an emergency fund to cover unexpected expenses. Another is that jobs can be lost at any time, so it’s important to save money when times are good.
The Great Depression also showed Americans the importance of helping others who are less fortunate. During the 1930s, charities were overwhelmed with requests for help, and many people went hungry or became homeless.
While the Great Depression was a difficult time for all Americans, it also showed the country’s resilience and determination. America bounced back from the depression and went on to become the world’s leading economic power.