the year of depression
Answers
Answer:
Explanation:
The Stock Market Crash
During the short depression that lasted from 1920 to 1921, known as the Forgotten Depression, the U.S. stock market fell by nearly 50%, and corporate profits declined over 90%. However, the U.S. economy enjoyed robust growth during the rest of the decade. The Roaring Twenties, as the era came to be known, was a period when the American public discovered the stock market and dove in head first.
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The Great Depression was the greatest and longest economic recession in modern world history.
The American public began a frenzy of investing in the speculative market in the 1920s.
The 1929 market crash wiped out a great deal of nominal wealth for individuals and businesses alike.
Other factors including inactivity followed by overaction by the Fed also contributed to the Great Depression.
Both Presidents Hoover and Roosevelt tried to mitigate the impact of the depression through government policies.
Neither the government policies or the beginning of WWII can be single-handedly credited with ending the depression.
The U.S. Economy Tailspin
The 1929 stock market crash wiped out nominal wealth, both corporate and private, and sent the U.S. economy into a tailspin. In early 1929, the U.S. unemployment rate was 3.2%; and by 1933, it had soared to 24.9%. Despite unprecedented interventions and government spending by both the Herbert Hoover and Franklin Delano Roosevelt administrations, the unemployment rate remained above 18.9% in 1938. Real per capita gross domestic product (GDP) was below 1929 levels by the time the Japanese bombed Pearl Harbor in late 1941.
Hoover's Propped-Up Prices
Although often characterized as a "do-nothing" president, Herbert Hoover did take action after the crash occurred. Between 1930 and 1932, he increased federal spending by 42% engaging in massive public works programs such as the Reconstruction Finance Corporation (RFC) and raising taxes to pay for the programs.s.
U.S. Protectionism
This bleak reality forced Hoover to use legislation to prop up prices and hence wages by choking out cheaper foreign competition. Following the tradition of protectionists, and against the protests of more than 1,000 of the nation's economists, Hoover signed into law the Smoot-Hawley Tariff Act of 1930.
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The Controversial New Deal
Voted into office in 1933, President Franklin Roosevelt promised massive change. The New Deal he initiated was an innovative, unprecedented series of domestic programs and acts designed to bolster American business, reduce unemployment, and protect the public.
New Deal Success and Failure
The New Deal re-instilled public confidence, as there were measurable results, such as reform and stabilization of the financial system. Roosevelt declared a bank holiday for an entire week in March 1933 to prevent institutional collapse due to panicked withdrawals. A program of construction of a network of dams, bridges, tunnels, and roads still in use followed. The projects offered employment for thousands via federal work programs.
The Impact of World War II
According to the gross domestic product (GDP) and employment figures only, the Great Depression appeared to end suddenly around 1941 to 1942, just as the United States entered World War II. The unemployment rate fell from 8 million in 1940 to under 1 million in 1943. However, more than 16.2 million Americans were conscripted to fight in the Armed Services. In the private sector, the real unemployment rate grew during the war.
Due to wartime shortages caused by rationing, the standard of living declined, and taxes rose dramatically to fund the war effort. Private investment dropped from $17.9 billion in 1940 to $5.7 billion in 1943, and total private sector production fell by nearly 50%.
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When the war ended, the trade routes remained open. In the first 12 months afterward, private investments rose from $10.6 billion to $30.6 billion. The stock market broke into a bull run in a few short years.