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This historical event happened over a decade when it started in 1929 and ended in 1941 during World War II. Financial crisis caused this era to have unemployment, economic downfall, struggles for families to provide income, shelter and food, and not to mention the hardships and failures of the nation's banks, businesses, and farms due to the stock market crash.

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The Great Depression, to some Historians, can be characterized as a disaster due to the time frame that the events lasted, the severity that hit families and communities, and the consequences that followed. This changed the modern industrial economy of the United states because of the negative outcomes. When we think of the roaring 20's we may think of the party era, so it is quite interesting to see how quick an ugly turn things went as the roaring 20's came to an end.

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The Federal Reserve system or "the Fed", is the central bank for the United states that was created by Congress. This was established to create a safer, flexible and stable nation when it came to the financial system. However, some people and historians believe that the Fed's decisions hurt the economy even though they may have thought they were acting in the public's best interest as they put policies into action during the Great Depression

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https://www.federalreservehistory.org/essays/great-depression

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"Regarding the Great Depression, ... we did it. We're very sorry. ... We won't do it again."
-Ben Bernanke, November 8, 2002, in a speech given at "A Conference to Honor Milton Friedman ... On the Occasion of His 90th Birthday."

In 2002, Ben Bernanke, then a member of the Federal Reserve Board of Governors, acknowledged publicly what economists have long believed. The Federal Reserve's mistakes contributed to the "worst economic disaster in American history" (Bernanke 2002).

Bernanke, like other economic historians, characterized the Great Depression as a disaster because of its length, depth, and consequences. The Depression lasted a decade, beginning in 1929 and ending during World War II. Industrial production plummeted. Unemployment soared. Families suffered. Marriage rates fell. The contraction began in the United States and spread around the globe. The Depression was the longest and deepest downturn in the history of the United States and the modern industrial economy.

The Great Depression began in August 1929, when the economic expansion of the Roaring Twenties came to an end. A series of financial crises punctuated the contraction. These crises included a stock market crash in 1929, a series of regional banking panics in 1930 and 1931, and a series of national and international financial crises from 1931 through 1933. The downturn hit bottom in March 1933, when the commercial banking system collapsed and President Roosevelt declared a national banking holiday.Sweeping reforms of the financial system accompanied the economic recovery, which was interrupted by a double-dip recession in 1937. Return to full output and employment occurred during the Second World War.

To understand Bernanke's statement, one needs to know what he meant by "we," "did it," and "won't do it again."

By "we," Bernanke meant the leaders of the Federal Reserve System. At the start of the Depression, the Federal Reserve's decision-making structure was decentralized and often ineffective. Each district had a governor who set policies for his district, although some decisions required approval of the Federal Reserve Board in Washington, DC. The Board lacked the authority and tools to act on its own and struggled to coordinate policies across districts. The governors and the Board understood the need for coordination; frequently corresponded concerning important issues; and established procedures and programs, such as the Open Market Investment Committee, to institutionalize cooperation. When these efforts yielded consensus, monetary policy could be swift and effective. But when the governors disagreed, districts could and sometimes did pursue independent and occasionally contradictory courses of action.

The governors disagreed on many issues, because at the time and for decades thereafter, experts disagreed about the best course of action and even about the correct conceptual framework for determining optimal policy. Information about the economy became available with long and variable lags. Experts within the Federal Reserve, in the business community, and among policymakers in Washington, DC, had different perceptions of events and advocated different solutions to problems. Researchers debated these issues for decades. Consensus emerged gradually. The views in this essay reflect conclusions expressed in the writings of three recent chairmen, Paul Volcker, Alan Greenspan, and Ben Bernanke.

By "did it," Bernanke meant that the leaders of the Federal Reserve implemented policies that they thought were in the public interest. Unintentionally, some of their decisions hurt the economy. Other policies that would have helped were not adopted.

An example of the former is the Fed's decision to raise interest rates in 1928 and 1929. The Fed did this in an attempt to limit speculation in securities markets. This action slowed economic activity in the United States. Because the international gold standard linked interest rates and monetary policies among participating nations, the Fed's actions triggered recessions in nations around the globe. The Fed repeated this mistake when responding to the international financial crisis in the fall of 1931. This website explores these issues in greater depth in our entries on the stock market crash of 1929 and the financial crises of 1931 through 1933.

An example of the latter is the Fed's failure to act as a lender of last resort during the banking panics that began in the fall of 1930 and ended with the banking holiday in the winter of 1933. This website explores this issue in essays on the banking panics of 1930 to 1931, the banking acts of 1932, and the banking holiday of 1933.

Men study the announcement of jobs at an employment agency during the Great Depression. (Photo: Bettmann/Bettmann/Getty Images)

One reason that Congress created the Federal Reserve, of course, was to act as a lender of last resort. Why did the Federal Reserve fail in this fundamental task? The Federal Reserve's leaders disagreed about the best response to banking crises. Some governors subscribed to a doctrine similar to Bagehot's dictum, which says that during financial panics, central banks should loan funds to solvent financial institutions beset by runs. Other governors subscribed to a doctrine known as real bills. This doctrine indicated that central banks should supply more funds to commercial banks during economic expansions, when individuals and firms demanded additional credit to finance production and commerce, and less during economic contractions, when demand for credit contracted. The real bills doctrine did not definitively describe what to do during banking panics, but many of its adherents considered panics to be symptoms of contractions, when central bank lending should contract. A few governors subscribed to an extreme version of the real bills doctrine labeled "liquidationist." This doctrine indicated that during financial panics, central banks should stand aside so that troubled financial institutions would fail. This pruning of weak institutions would accelerate the evolution of a healthier economic system. Herbert Hoover's secretary of treasury, Andrew Mellon, who served on the Federal Reserve Board, advocated this approach. These intellectual tensions and the Federal Reserve's ineffective decision-making structure made it difficult, and at times impossible, for the Fed's leaders to take effective action.

Among leaders of the Federal Reserve, differences of opinion also existed about whether to help and how much assistance to extend to financial institutions that did not belong to the Federal Reserve. Some leaders thought aid should only be extended to commercial banks that were members of the Federal Reserve System. Others thought member banks should receive assistance substantial enough to enable them to help their customers, including financial institutions that did not belong to the Federal Reserve, but the advisability and legality of this pass-through assistance was the subject of debate. Only a handful of leaders thought the Federal Reserve (or federal government) should directly aid commercial banks (or other financial institutions) that did not belong to the Federal Reserve. One advocate of widespread direct assistance was Eugene Meyer, governor of the Federal Reserve Board, who was instrumental in the creation of the Reconstruction Finance Corporation.

These differences of opinion contributed to the Federal Reserve's most serious sin of omission: failure to stem the decline in the supply of money. From the fall of 1930 through the winter of 1933, the money supply fell by nearly 30 percent. The declining supply of funds reduced average prices by an equivalent amount. This deflation increased debt burdens; distorted economic decision-making; reduced consumption; increased unemployment; and forced banks, firms, and individuals into bankruptcy. The deflation stemmed from the collapse of the banking system, as explained in the essay on the banking panics of 1930 and 1931.

The Federal Reserve could have prevented deflation by preventing the collapse of the banking system or by counteracting the collapse with an expansion of the monetary base, but it failed to do so for several reasons. The economic collapse was unforeseen and unprecedented. Decision makers lacked effective mechanisms for determining what went wrong and lacked the authority to take actions sufficient to cure the economy. Some decision makers misinterpreted signals about the state of the economy, such as the nominal interest rate, because of their adherence to the real bills philosophy. Others deemed defending the gold standard by raising interests and reducing the supply of money and credit to be better for the economy than aiding ailing banks with the opposite actions.

On several occasions, the Federal Reserve did implement policies that modern monetary scholars believe could have stemmed the contraction. In the spring of 1931, the Federal Reserve began to expand the monetary base, but the expansion was insufficient to offset the deflationary effects of the banking crises. In the spring of 1932, after Congress provided the Federal Reserve with the necessary authority, the Federal Reserve expanded the monetary base aggressively. The policy appeared effective initially, but after a few months the Federal Reserve changed course. A series of political and international shocks hit the economy, and the contraction resumed. Overall, the Fed's efforts to end the deflation and resuscitate the financial system, while well intentioned and based on the best available information, appear to have been too little and too late.

The flaws in the Federal Reserve's structure became apparent during the initial years of the Great Depression. Congress responded by reforming the Federal Reserve and the entire financial system. Under the Hoover administration, congressional reforms culminated in the Reconstruction Finance Corporation Act and the Banking Act of 1932. Under the Roosevelt administration, reforms culminated in the Emergency Banking Act of 1933, the Banking Act of 1933 (commonly called Glass-Steagall), the Gold Reserve Act of 1934, and the Banking Act of 1935. This legislation shifted some of the Federal Reserve's responsibilities to the Treasury Department and to new federal agencies such as the Reconstruction Finance Corporation and Federal Deposit Insurance Corporation. These agencies dominated monetary and banking policy until the 1950s.

The reforms of the 1930s, '40s, and '50s turned the Federal Reserve into a modern central bank. The creation of the modern intellectual framework underlying economic policy took longer and continues today. The Fed's combination of a well-designed central bank and an effective conceptual framework enabled Bernanke to state confidently that "we won't do it again."

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                      by 
Gary Richardson

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The longest and deepest downturn in the history of the United States and the modern industrial economy lasted more than a decade, beginning in 1929 and ending during World War II in 1941.

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When the Great Depression occurred, President Roosevelt created a "New Deal". This created social security, unemployment insurance, and federal family assistance during the 1930's.

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Goods and services were extremely effected during this time period in history. This is because the gross national productions of goods and services had a huge decline of 30% during 1929-1933. This decline was seen in prices of farm products, raw materials, industrial goods, stocks and more.

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Most money, as we know, is created on paper but during the Great Depression governments were required to redeem that paper for gold if someone requested it. Inflation was prevented through this strategy because it put a limit on the amount of currency through paper money being made. In fact, loss of gold which is also labeled as convertible currencies, could force governments to raise interest rates higher and higher.

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Economist Charles Kindleberger had a different take on the Great Depression. He believes that the historical and global event happened, "by  a lack of world economic leadership". He also believes that countries did not do enough to stop the economic crises and lead to the severity of the Great Depression because serious measures were lacking action leading up to the Great Depression?
Was this a new point of view to you?
Could you agree with Charles Kindleberger?

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The Great Depression goes down in history as a sever economic downfall and because of this it prompted the Government to look into and prevent repeated events or situations of the Great Depression. This prompted economic policies to be more active and taken seriously. When we look back at that era of time we may think that we could have prevented it and try things differently. Some may even say that events of another depression will never happen again... Take this quick survey question to express your thoughts!

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Web survey powered by SurveyMonkey.com. Create your own online survey now with SurveyMonkey's expert certified FREE templates.

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https://www.econlib.org/library/Enc1/GreatDepression.html#:~:text=The%20Great%20De

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[An updated version of this article can be found at Great Depression in the 2nd edition.]

The Great Depression of the thirties remains the most important economic event in American history. It caused enormous hardship for tens of millions of people and the failure of a large fraction of the nation's banks, businesses, and farms. It transformed national politics by vastly expanding government, which was increasingly expected to stabilize the economy and to prevent suffering. Democrats became the majority party. In 1929 the Republicans controlled the White House and Congress. By 1933, the Democrats had the presidency and, with huge margins, Congress (310-117 in the House, and 60-35 in the Senate). President Franklin Roosevelt's New Deal gave birth to the American version of the welfare state. Social Security, unemployment insurance, and federal family assistance all began in the thirties.

It is hard for those who did not live through it to grasp the full force of the worldwide depression. Between 1930 and 1939 U.S. unemployment averaged 18.2 percent. The economy's output of goods and services (gross national product) declined 30 percent between 1929 and 1933 and recovered to the 1929 level only in 1939. Prices of almost everything (farm products, raw materials, industrial goods, stocks) fell dramatically. Farm prices, for instance, dropped 51 percent from 1929 to 1933. World trade shriveled: between 1929 and 1933 it shrank 65 percent in dollar value and 25 percent in unit volume. Most nations suffered. In 1932 Britain's unemployment was 17.6 percent. Germany's depression hastened the rise of Hitler and, thereby, contributed to World War II.

The depression is best understood as the final chapter of the breakdown of the worldwide economic order. The breakdown started with World War I and ended in the thirties with the collapse of the gold standard. As the depression deepened, governments tried to protect their reserves of gold by keeping interest rates high and credit tight for too long. This had a devastating impact on credit, spending, and prices, and an ordinary business slump became a calamity. What ultimately ended the depression was World War II. Military spending and mobilization reduced the U.S. unemployment rate to 1.9 percent by 1943.

With hindsight it seems amazing that governments did not act sooner and more forcefully to end the depression. The fact that they did not attests to how different people's expectations and world politics were in the thirties. The depression can be understood only in the context of the times. Consider four huge differences between then and now:

1. The gold standard. Most money was paper, as it is now, but governments were obligated, if requested, to redeem that paper for gold. This "convertibility" put an upper limit on the amount of paper currency governments could print, and thus prevented inflation. There was no tradition (as there is today) of continuous, modest inflation. Most countries went off the gold standard during World War I, and restoring it was a major postwar aim. Britain, for instance, returned to gold in 1925. Other countries backed their paper money not with gold, but with other currencies-mainly U.S. dollars and British pounds-that were convertible into gold. As a result flexibility of governments was limited. A loss of gold (or convertible currencies) often forced governments to raise interest rates. The higher interest rates discouraged conversion of interest-bearing deposits into gold and bolstered confidence that inflation would not break the commitment to gold.

2. Economic policy. Apart from the gold standard, economic policy barely existed. There was little belief that governments could, or should, prevent business slumps. These were seen as natural, therapeutic, and self-correcting. The lower wages and interest rates caused by slumps would spur recovery. The 1920-21 downturn (when industrial production fell 25 percent) had preceded the prosperous twenties. "People will work harder, live a more moral life," Andrew Mellon, Treasury secretary under President Herbert Hoover, said after the depression started. "Enterprising people will pick up the wrecks from less competent people," he claimed. One exception to the hands-off attitude was the Federal Reserve, created in 1913. It was charged with the responsibility for providing emergency funds to banks so that surprise withdrawals would not trigger bank runs and a financial panic.

3. Production patterns. Farming and raw materials were much more important parts of the economy than they are today. This meant that lower commodity prices could cripple domestic prosperity and world trade, because price declines destroyed the purchasing power of farmers and other primary producers (including entire nations). In 1929 farming accounted for 23 percent of U.S. employment (versus 2.5 percent today). Two-fifths of world trade was in farm products, another fifth in other raw materials. Poor countries (including countries in Latin America, Asia, and Central Europe) exported food and raw materials and imported manufactured goods from industrial nations.

4. The impact of World War I. Wartime inflation, when the gold standard had been suspended, raised prices and inspired fears that gold stocks were inadequate to provide backing for enlarged money supplies at the new, higher price level. This was one reason that convertible currencies, such as the dollar and pound, were used as gold substitutes. The war weakened Britain, left Germany with massive reparations payments, and split the Austro-Hungarian Empire into many countries. These countries, plus Germany, depended on foreign loans (in convertible currencies) to pay for their imports. The arrangement was unstable because any withdrawal of short-term loans would force the borrowing countries to retrench, which could cripple world trade.

To view the Great Depression as the last gasp of the gold standard-as economic historians Barry Eichengreen and Peter Temin suggest-bridges the gap between two popular explanations. The best-known, advanced by economists Milton Friedman and Anna Schwartz in A Monetary History of the United States, 1867-1960, blames the Federal Reserve for permitting two-fifths of the nation's banks to fail between 1929 and 1933 (or 10,797 of the 25,568 banks in 1929). Since deposits were not insured then, the bank failures wiped out savings and shrank the money supply. From 1929 to 1933 the money supply dropped by one-third, choking off credit and making it impossible for many individuals and businesses to spend or invest. Friedman and Schwartz argue that it was this drop in the money supply that strangled the economy. They consider the depression mainly an American affair that spread abroad.

In contrast, economist Charles Kindleberger, in The World in Depression, 1929-1939, sees the depression as a global event caused by a lack of world economic leadership. According to Kindleberger, Britain provided leadership before World War I. It fostered global trade by keeping its markets open, promoted expansion by making overseas investments, and prevented financial crises with emergency loans. After World War II the United States played this role. But between the wars no country did, and the depression fed on itself, Kindleberger argues. No country did enough to halt banking crises, and the entire industrial world adopted protectionist measures in attempts to curtail imports. In 1930, for example, President Herbert Hoover signed the Smoot-Hawley tariff, raising tariffs on dutiable items by 52 percent. The protectionism put an extra brake on world trade just when countries should have been promoting it.

With the passage of time, both the Friedman-Schwartz and Kindleberger views seem correct. Inept monetary policy explains the depression's severity, as Friedman and Schwartz argue. But because the gold standard caused many governments to make similar errors, the effects were worldwide, as Kindleberger contends.

The start of the depression is usually dated to the spectacular stock market crash of 1929. The Dow Jones industrial average hit its peak of 381 on September 3, up from 300 at the start of the year. After sporadic declines, the roof fell in on October 24 (Black Thursday). Stock prices dropped 15 to 20 percent before being supported by buying from a pool of bankers. Although the market closed with only a small loss (down 6 to 299), trading was nearly 12.9 million shares, about triple the normal volume. The selling panic resumed the next week. On Monday the Dow fell 38 points to 260, then the biggest one-day drop ever. The next day (Black Tuesday), it slid another 30 points. By November 13, the Dow was at 198.

There had been warnings. Many commentators complained before the crash that the market was driven by speculation. A lot of stock was bought on credit. Between the end of 1927 and October 1929, loans to brokers rose 92 percent. At the start of October, loans equaled nearly a fifth of the value of all stocks. But by itself the stock market crash did not cause the depression. By year's end the Dow Jones industrial average had actually rebounded to 248 (down 17 percent from the beginning of 1929). It continued rising in early 1930.

The depression is often blamed on the passivity of President Hoover and the Federal Reserve. This view is simplistic. True, Hoover's commitment to a balanced budget-the orthodoxy of the day-precluded big new spending programs. And his decision in 1932 to combat a budget deficit by raising taxes sharply is widely viewed as a major blunder. But it is not true that Hoover and the Federal Reserve stood idly by and did nothing as the depression worsened. After the crash Hoover instituted a tax cut equal to 4 percent of federal revenues. He urged state and local governments to raise their spending on public works projects. Hoover also created the Reconstruction Finance Corporation, which provided loans to shaky banks, utilities, and railroads. In 1931 he suspended collection of foreign-debt payments to the United States, which he thought were impeding recovery of the international economy.

Nor was the Federal Reserve entirely passive. During the crash the Fed lent liberally to banks so they could sustain securities lending. Interest rates were allowed to drop rapidly. The discount rate (the rate at which the Federal Reserve lends to commercial banks) fell from 6 percent in October 1929 to 2.5 percent in June 1930. The money supply (cash in circulation plus checking and time deposits at banks) declined only slightly in the next year. Tighter Federal Reserve policy in 1928 and early 1929-intended to check stock market speculation-may have helped trigger the economic downturn. But the Federal Reserve was not stingy in early 1930 and was not driving the economy into depression at that time. It was not until 1931 and later that the Federal Reserve failed to act as the "lender of last resort" and allowed so many banks to fail.

The truth is that, until the summer or early fall of 1930, almost everyone expected the economy to recover, just as it had in 1921. Unfortunately, almost everyone underestimated the forces pulling the economy down. One was the drop in trade that resulted from collapsing commodity prices. Kindleberger has argued that the price collapse was worsened by the stock market crash. The connection lay in a drying up of credit. Many loans used to buy stock had come from foreigners and big corporations, and they demanded repayment when stock prices plummeted. New York banks assumed some of the loans, but they cut loans to the importers of raw materials. Demand for these products (rubber, cocoa, coffee) dropped, and prices fell. Strapped for funds, countries that exported commodities reduced their imports of manufactured goods from industrial nations. The drop in trade was deepened by Smoot-Hawley, which provoked massive retaliation by other nations.

What made matters worse was a big drop in U.S. consumer spending-far more than can be explained by the stock market crash. The drop may have been a backlash to the rise of installment lending (for cars, furniture, and appliances) in the twenties. The prevailing practice allowed lenders to repossess an item if the borrower missed just one payment. People may have stopped making new purchases to reduce the risk of losing things they already had bought on credit. Whatever happened, the slump soon fed on itself. Weak spending depressed prices, which meant that many farmers, businesses, and nations couldn't repay their debts. Rising bad debts prompted banks to restrict new loans and sell financial assets, usually bonds. Scarce credit led to less borrowing, less spending, lower prices, and more bankruptcies. Trade and investment spiraled downward. Confidence crumbled, and as it did, bank runs-people clamoring to convert deposits into cash-ensued.

Why could no one stop this spiral? In the United States there were waves of bank failures in 1931 and 1932. Friedman and Schwartz maintain that the Federal Reserve could have prevented them by lending directly to weak banks and by aggressive "open market" operations (that is, by buying U.S. Treasury securities and thereby injecting new funds into banks and the economy). This action would have halted the depression, they argue. They blame the Federal Reserve's timidity on the 1928 death of Benjamin Strong, the president of the Federal Reserve Bank of New York. Strong had dominated the Federal Reserve System, which consists of twelve regional banks and a board of governors in Washington. He firmly believed that the Federal Reserve had to prevent banking panics and sustain economic growth. When he died, power in the Federal Reserve passed to officials in Washington, whose ideas were murkier. Had Strong lived, Friedman and Schwartz contend, he would have averted the banking collapse.

Maybe-and maybe not. In fact, the Federal Reserve faced conflicting demands to end the depression and to protect the gold standard. The first required easier credit, the second tighter credit. The gold standard handcuffed governments around the world. The mere hint that a country might abandon gold prompted speculators and international depositors to change local money into gold or a convertible currency. Deposit withdrawals spread panic and squeezed lending. It was a global process that ultimately forced all governments off gold. In May 1931 there was a run against Creditanstalt, a large Austrian bank. The panic then shifted to Germany and, in late summer, to Britain, which left gold in September.

The United States was trapped by the same forces. After Britain went off gold, for instance, the Federal Reserve raised interest rates sharply to stem gold outflows. The discount rate went from 1.5 to 3.5 percent, which, considering the condition of the economy, was a huge increase. The best evidence that the gold standard fostered the depression is that once countries abandoned it, their economies usually began growing again. This happened in Germany, Britain, and, after Roosevelt left gold in March and April 1933, the United States.

Although self-defeating, the defense of gold was a product of law as well as custom. The Federal Reserve had to ensure that every dollar of paper money was backed by at least forty cents of gold. Once Congress ended the obligation to exchange gold for currency, the Fed was largely liberated from worrying about gold. This may have been the most important part of the New Deal's economic program. The economy did improve. Between 1933 and 1937, the unemployment rate dropped from 25 to 14 percent before a new recession pushed it back up to 19 percent in 1938. The 1937-38 recession is widely blamed on the Federal Reserve's mistaken decision to raise bank reserve requirements in August 1936 and early 1937. (Reserves are funds that banks keep as vault cash or as deposits at the Federal Reserve.)

Many economists now believe that the New Deal, apart from its gold policy, probably had little impact on economic activity. At the heart of the early New Deal were the National Recovery Administration (NRA) and the Agriculture Adjustment Act (AAA). Created in Roosevelt's first hundred days, they sought to promote recovery by propping up prices. The idea was to improve incomes and halt bankruptcies. The AAA tried to eliminate agricultural surpluses (pigs were slaughtered, crops destroyed) and paid farmers not to plant. The NRA allowed companies in the same industry to set wages, prices, and working hours in an effort to check "destructive competition." This approach rested on a remarkable contradiction: the way to get recovery, which requires more production, is to have less production. There never has been much evidence that it worked, and the Supreme Court found the NRA unconstitutional in 1935.

The New Deal did relieve suffering. Perhaps 10 million to 12 million Americans worked at some time on public works or in relief jobs (through the Public Works Administration, the Works Project Administration, and the Civilian Conservation Corps). People had their bank deposits protected with the advent of deposit insurance. The Securities and Exchange Commission regulated the stock market. Roosevelt maintained faith in democracy.

But there was a cost. The New Deal also caused suffering. Sharecroppers were often thrown out of work, for example, when the AAA paid landowners not to grow. The New Deal also fostered class consciousness. Roosevelt increasingly blamed the depression on the wealthy-"economic royalists," as he called them. The loss of business confidence in government policies may have deterred new investment, offsetting any economic stimulus of higher public spending. But by 1933 the economy had been so ravaged that only a partial recovery may have been possible until the huge wartime boom.

The depression left an enormous legacy. The New Deal accustomed people to look to government, rather than to private charity, for help. After World War II, governments everywhere strove to prevent a repetition of the Great Depression. Economic policies became more active and, as a practical matter, more inflationary. With the gold standard gone, governments had more freedom to stimulate their economies with an expansion of money and credit. The political inclination was to act sooner, rather than later, to halt a slump. Likewise, the protectionism of the thirties prompted postwar efforts to reduce tariffs and other trade barriers. Finally, the wild swings of exchange rates that occurred after countries went off gold spurred the creation of the Bretton Woods system of fixed exchange rates in 1944. This system (named after a resort in New Hampshire where the agreement was finalized) stipulated that currencies were to maintain fixed exchange rates with the dollar. The system broke down in the early seventies.

It is commonly said that another depression will never occur. This is probably true, as long as "another depression" means a crude repetition of the thirties. However, crises can come in unfamiliar forms. The basic lesson from the Great Depression is that governments cannot permit massive collapses of banks or spending. The deeper lesson is that there are times when the world changes so much and events move so rapidly that even the well-informed do not know how to respond. This is the story of the depression. Now it seems preventable. Then, it was baffling. World War I made restoration of the prewar economic system difficult, maybe impossible. But that is what world leaders attempted because it was all they knew and it had worked. Only its collapse convinced them to try something different. Old ideas were overtaken and overwhelmed. It has happened before-and could again.
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An updated version of this article can be found at Great Depression in the 2nd edition.] The Great Depression of the thirties remains the most important economic event in American history.

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Hearing about the members of communities that lived through the Great Depression is impactful and shows how powerful and important this crisis really was. Just imagine what community members and families went through and how they felt dealing with the burdens that came from devastating consequences that developed due to the depression. Some of these burdens were poverty, rising crime rates, homelessness, bank crisis and more.

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The social and cultural effects during the Great Depression can be described as, "While many undesirable vices associated with hopelessness were on the rise, many family units were also strengthened through the crisis" (ushistory.org, Social and cultural effects of the depression 2008-2021). I felt this was a powerful statement because it shows community members were going through a lot of emotions from hopelessness to banding together to strengthen through the crisis and hold out for positive outcomes and opportunities. This also shows that there are more to people's stories than we may think when it comes to learning about the Great Depression because many people went through similar struggles but in different ways and magnitude and not consider the fortunate stories of people's upbringings during this historical event.

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Since unemployment rates spiked up this caused crime rates to also increase. Unemployed workers were so desperate to obtain resources they would resort to petty theft.

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Suicide was on the rise due to reports of malnutrition because families were not able to put food on the table. During this time some thought it would be easier to end their life than struggle to provide or find food.

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Prostitution became more engaging because women were desperate to find a way to pay for their bills. They resorted to these activities so they could bring in some sort of income and try to make it through the depressional era.

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Health care support and availability seemed to become more and more scarce for community members due to the fact that health care was only reserved for only the direst of circumstances during that time of the depression.

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Alcoholism increased because people wanted to find an escape to all the negative changes to their new reality of the Great Depression. Americans would even switch to smoking cigar's to cheaper cigarettes because the economic downfall increased prices of cigars making them too expensive to purchase.

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In this audio I discuss the difficult demographic trends communities and the world went through as the Great Depression took place. Struggles from marriages, divorces, birth rates and migrations are included in my audio. (short and simple)

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Before the crash of the depression, people owned a radio. This came in handy during the Great Depression because those that did own a radio were able to listen to the radio for free. This increased the popularity and flourishment of having a radio during this time frame. Even President Roosevelt used the powerful radio technology to publish, "fireside chats", where he could keep the general public informed.

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There was a lot to learn in this section about the Great Depression. Think back to what you have learned. Were you able to relate to these communities and families? How do you think you would be able to survive if we went through a depression in today's society?

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Social and Cultural Effects of the Depression [ushistory.org]

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Social and Cultural Effects of the Depression

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Communities Responding to the Great Depression 

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Communities Responding to the Great Depression 

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Americans across the globe wanted to create a richer and more equitable society during and after the depression hit them hard. Think back to the, New Deal, from President Roosevelt. With his action to make that deal and put it into action allowed a new standard for how the federal government should respond when a major national emergency occurs. This allowed the United Stated to enter a time of national prosperity that lead to greater income equality. The people of America did not sit around and let the depression to continue but instead they those to respond in an impactful way that transformed America to do better with the economic system.

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President Roosevelt would reinvent how the nation would handle much of its business by involving the federal government to establish more governing authority. To further this authority the federal government would fund relief, jobs, and infrastructure. This would create a new normal that would incorporate a national retirement system, unemployment insurance, disability benefits, minimum wages and maximum hours, public housing, mortgage protection, electrification of rural American, and the right of industrial labor to bargain collectively through unions.

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After the Great Depression president Roosevelt learned a valuable lesson that "to lead, he needed to listen". This is powerful because some people can remain one sided and not open minded to new perspectives and ideas causing the same repeats and no growth. This cause the Democratic politicians and union organizers discovered they needed to shift their focus on real problems that communities faced and listed to what they need.

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In the 1930s, Americans responded to economic calamity by creating a richer and more equitable society. We can do it again.

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Leave your name and response!(: This is a safe and respectable place to share thoughts and perspectives.

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Just like many, James Braddock, struggled and fought through this horrific economic downfall. He was a huge inspiration to the community and the world during this time. Braddock was fairly wealthy but when the Great Depression took place he found himself struggling to keep income flowing and providing food and shelter for his family. He took great lengths to try and get any work available that would pay to provide anything to keep his family alive. It became so difficult for Braddock to find work, so much so that, "Braddock had to walk the three miles from his home in Woodcliff to the waterfront, uncertain if there would be work. Exhausted physically and emotionally, he would walk in the early morning darkness to 69th Street in Guttenberg, to the long set of stairs that led to the docks of the Weehawken and Hoboken, and descend to the place where the railroad tracks nearly met the deep-water port" (Schaap, 2005). Keep in mind this journey he took to find work was so harsh with the intense cold weather and the risk of getting robbed by others made the journey more intense.

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Braddock would end up fighting in the boxing ring to gain more income to save his family as they struggled to survive day to day. He went from being unemployed for over a year to defeating Max Baer (who killed two people in the ring) for the world heavyweight title. After defeating such an amazing and dangerous boxer, Braddock became the folk hero that the entire nation needed as they all faced struggling times and hardships to survive. Braddock would gain the nickname, Cinderella Man", in the boxing ring because he came from this fairytale story rising from unemployment and being poor to becoming the heavyweight boxing champion of the world.

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Before Braddock became a fighting sensation in the boxing ring, him and his family struggled to make ends meet during the depression. His family would live on bread and potatoes meanwhile they could not even pay rent for months and months. This forced the Braddock family to move from their already small apartment to a smaller basement that they barely could pay for. Not to mention other necessities such as their milk bill, gas and electric bill went unpaid. This made Braddock's story relatable and inspiring to communities and families all over the world. Just like Braddock, many father's would search the ends of the earth to find work to put food on the table, families would try to pay their bills, families tried to keep warm during the cold months. The inspiration Braddock had to keep fighting and find a way changed the depression for many optimistic people and families.

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Here is the trailer to the powerful and hit movie called, "Cinderella Man", that tells the story of James Braddock during the Great Depression and his boxing journey and victories.

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Cinderella Man (2005) Official Trailer #2 - Renée Zellweger, Russell Crowe Movie HD

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Jun 10, 2005

Jeremy SchaapSportsCenter Reporter/Host, Classic Sports Reporters

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Jeremy Schaap is an ESPN anchor and national correspondent, based in New York since 1998. He is a New York Times best-selling author ("Cinderella Man: James J. Braddock, Max Baer, and the Greatest Upset in Boxing History") and a contributor to "ABC World News Tonight" and "Nightline."

Editor's note: On June 13, 1935, James J. Braddock completed one of the most unlikely comebacks in sports history: He defeated Max Baer for the world heavyweight title little more than a year after being an unemployable boxer, a fighter with one good hand and six cents to his name. ESPN anchor and national correspondent Jeremy Schaap's book "Cinderella Man" chronicles Braddock's life and explains how he became a folk hero for a nation in desperate need of one. ESPN.com excerpts a chapter from the book that reveals just how tough times were for Braddock and a nation in the grip of an economic depression. It also sets the scene for Braddock's eventual renaissance. Chapter 10: On the Waterfront
Weehawken and Hoboken:
Winter 1933–1934

For more than a month after the Feldman fight, Braddock sat at home [in New Jersey] with his right hand in a cast. The dirty white plaster reminded him constantly of that night in Mount Vernon [N.Y.] when his career seemed to have ended in ignominy. Mae had just given birth to their daughter, Rose Marie, but Braddock could find little joy in her arrival. Another mouth to feed, and the winter was coming soon. For the first time in his life, Jim Braddock was bad company.

"After the fight, I tried to comfort him," Mae Braddock would later say, "but it was no use. His heart was broken. Despite the fact that he knew he couldn't have done better; despite the fact that he had actually gone ahead fighting, standing the agonies of that stabbing hand, when any other man would have quit, meant nothing to him. He was morose for weeks."

Even though Braddock knew he had displayed uncommon courage by continuing to fight after breaking his hand, he was despondent. His honor meant a great deal to him, yet retaining it was no solace in the face of the harsh realities of his situation. He was perilously close to the poorhouse. When the cast came off, Braddock started looking for work.

* * * * *

With no high school diploma and no skills outside the ring, he had limited options. Some friends worked down on the docks in Weehawken and Hoboken, and he thought they might help him find some paydays. They did. But the work was sporadic. And without a car or any money for public transportation, Braddock had to walk the three miles from his home in Woodcliff to the waterfront, uncertain if there would be work. Exhausted physically and emotionally, he would walk in the early morning darkness to 69th Street in Guttenberg, to the long set of stairs that led to the docks of Weehawken and Hoboken, and descend to the place where the railroad tracks nearly met the deep-water port. He would ask if there was any work. When the answer was yes, he would spend the day unloading railroad ties from the enormous ships that brought them up from the steel mills in the South. Laboring shoulder to shoulder with hardened stevedores and others who were down and nearly out, Braddock never suggested, in words or deeds, that he was too good for such work. If the other guys insisted, he would tell them about some of his fights. But he didn't like talking, and he especially didn't like talking about himself.

Braddock's status as a former contender did not shield him from the grim facts of working on the docks. Like everyone else, he was subjected to the elements and the casual cruelty of the foremen, who tended to treat the dock wallopers, as they were sometimes called, like cattle. The work was hard, and made even harder by the knowledge that the wages were miserably low because the economics of the place were skewed by kickbacks and no-show jobs. Dissent was not an option. Mobbed up and lawless, the International Longshoremen's Association, the union that controlled the docks, was notoriously corrupt. It was not uncommon for those who made waves to disappear beneath them. Braddock often worked within a few hundred yards of the Fifth Street Pier in Hoboken, where the big ships of the Holland-America line docked and where his father was a night watchman.

* * * * *

Tourists and immigrants made their way down the gangways of the Statendam, Veendam, and Volendam. He would watch them and wonder just how bad things had to be in Europe for them to want to come to America. Hoboken, though, was relatively quiet compared to Weehawken, where hundreds of men were beginning a new public works project. Eventually the Lincoln Tunnel would link Weehawken and West 39th Street in midtown Manhattan. It was in the shadow of the bulldozers and cranes that Braddock quietly labored.

With his bum right hand, he had to do all the heavy lifting with his left. Sometimes he operated a hand truck, again without benefit of his right hand. He would work until the ships were unloaded. There was no overtime, just an expectation that he would work until he was done. Then he would get four dollars – and sometimes he would have to kick some of that back to the hiring boss. Even during the Depression, there was work on the docks – the constant flow of commerce was never interrupted. Most of the men there were comfortable with manual labor, and Braddock fit right in. He developed a reputation as someone who was willing, indeed eager, to do his share and more. He never looked for an easy way out; he never let the guy on the other end of the load take the brunt of it. He never expected to be treated any differently from anyone else merely because he was Jim Braddock, former contender for the light heavyweight title.

When the day's work had been completed, Braddock would sometimes treat himself to a nickel beer at one of the pubs frequented by seafaring men and longshoremen for a century. He celebrated the end of Prohibition on Dec. 5, 1933, with two beers. Usually, though, he was too exhausted and depressed for camaraderie. He would simply walk home – another three miles – and climb into bed with Mae.

Those were the good days, when there was work in Weehawken or Hoboken. On the days when the answer was "No, champ," he would climb the stairs back up to 69th Street, then turn north for the docks of West New York, walking another two miles.

* * * * *

Sometimes there would be work there. Usually there wasn't. If no work was to be found anywhere on the docks or in the railroad yards, he would trudge back to North Bergen, looking for something to do. He would offer to clean basements, sweep floors, shovel snow. He was a familiar and sad sight in his faded green sweater, threadbare pants, and battered shoes.

Once in a while he would tend bar at the North Bergen Social and Athletic Club, serving the same men who for years had crossed the river to Manhattan to watch him fight. They were the men he had grown up with, who had proudly watched his rise as a fighter; now he was pouring drafts for them. Each day it seemed he was further humbled. As the new year dawned, Gould delivered some encouraging news. He had managed to locate an opponent – a good opponent, the big German Walter Neusel. On Dec. 30, 1933, Neusel defeated Ray Impellittiere at Madison Square Garden.

To secure Impellittiere as an opponent, Neusel had guaranteed him $5,000. When the gate receipts were tallied, the total purse for the main event was $5,025. After his managers' and trainers' fees were deducted, Neusel received $3.19 for his 10-round effort. Hoping to make more against Braddock, he agreed to fight him on Jan. 21. But the New York boxing commission would not sanction the fight. With the Feldman fight still fresh in their memories, the commissioners did to Braddock what they had done in 1930 when he was scheduled to fight Max Baer. They were genuinely concerned that he might get seriously hurt, though he had never been seriously hurt in the ring.

With the fight off, the Braddocks lived on bread and potatoes. Potato stew and potato hash were the staples of their table. For several months they couldn't pay the rent. Finally, they were forced to move from their cramped apartment to an even smaller basement apartment in the same building, which they could barely afford. The milk bill went unpaid; so did the gas and electric bill.

* * * * *

Braddock knew he was jinxed when the winter of his misery developed in February into the coldest winter on record in the Northeast. Lake Ontario froze for the first time since 1874. Ice a foot thick formed in Long Island Sound. John D. Rockefeller, who was ill, employed three shifts of firemen to keep his mansion in Tarrytown, N.Y., at 72 degrees Fahrenheit. After one bitingly cold day on the docks – temperatures in north Jersey in February dipped to minus 10 degrees, at the time the coldest temperature ever recorded in the state – Braddock walked home to his apartment, opened the door, and said, "Mae, what's going on? Why are the lights off?"

"Jim, they shut off the electricity," she said.

Braddock cursed the electric company and himself. At least the apartment still had heat, but he knew that it soon would be turned off too, and then his family might die.

He spent the night considering what his options might be. There was only one.

In the morning he walked from his apartment to the ferry in West New York. He had exactly one dime in his pocket. The fare to cross to Manhattan was four cents. With six cents left, he crossed the Hudson, walked more than a mile to Madison Square Garden, and tried to find Joe Gould. Gould's friends at the Garden were kind enough to accept his mail and take his messages. By this time, Gould was working as a door-to-door salesman, hawking gadgets and radios. Every day, though, he would check in at the Garden to see who was looking for him. Usually it was no one. His old friend Francis Albertanti, the Garden's publicist, made sure that he was kept in the loop and made to feel as if he still mattered, which in fact he didn't. When Albertanti saw Braddock walk through his office door – gaunter than ever, his eyes made moist by the cold and his hat literally in his hands – he told him that Joe was out but would be in soon. Albertanti had known Braddock since 1928 and had profiled him for the Ring [magazine]. He tried to make conversation but avoided asking how things were going, because he knew how things were going.

* * * * *

Still, he could see in Braddock's face a desperation that he had never seen there before. He wanted to tell Braddock not to worry, but he knew that he
had every reason to worry.

Finally Gould walked through the door.

"Jim, what are you doing here?" he said. "Is everything all right?"

"Joe, I know you're broke, but I don't know where else to go," Braddock said. "I need $35. Rose Marie needs milk and we need the heat."

"Wait right here," Gould said.

He scurried away, leaving Braddock to his thoughts. Here he was, it occurred to him, back at the Garden, where he had once fought for the championship. For years he had hoped to return to this building to fight in another main event. Now he was back, pleading for what amounted to little more than chump change.

"Here's thirty-five dollars. Pay your bills. I'll get you more when I can," Gould said.

"I'll pay you back soon."

"I know."

Gould had borrowed the money from Jimmy Johnston, who never expected to see it again. Braddock walked back to 42nd Street and west to the river, handed the ferryman four cents, and crossed back to New Jersey. On his way home he stopped to pay the milkman and the utility company. When he got back to the apartment, he paid the rent.

Within days he was broke again, and now he had nowhere to turn. In those days, Lud Shabazian would see him occasionally on the streets of Union City and North Bergen. He noticed, he later wrote, how the well-wishers of Braddock's youth now crossed to the other side of the street when they saw him coming.

As Joe E. Lewis would later say, a friend in need is a pest. The guilt and the anxiety he was feeling turned Braddock into an insomniac. Most nights, at about 2 a.m., he climbed from his sleepless bed, got dressed, went out into the cold, and walked for miles.

* * * * *

Mae feared that he might kill himself. On the rare occasions when sleep came, he tossed and turned, mumbling to Mae. He would say the same things over and over.

"Mae, please believe me," he would say, "I'm doing everything I can. I'm so sorry, darling. I'm sorry, so sorry."

Finally Braddock made the most difficult decision he had ever made. With nowhere else to turn, he decided to apply for relief from the county. Today millionaires unashamedly accept benefits from the state when they are unemployed. Millions of people of lesser means survive because of the welfare programs that were conceived during the Depression. That a man might be embarrassed to apply for money from the government is almost laughably anachronistic. But in 1933, Jim Braddock applied for relief only when all his other options had been exhausted – only when he was desperate. He was too ashamed to tell his parents.

"Darling, I can't stand this any longer," he said to Mae. "It just tears my heart into little bits to see you and the babies suffering for want of food and clothing. I'm going over to the relief bureau and see if they can't make us a loan until I can get something to do."

Braddock went to see his old friend Harry Buesser, the promoter turned politician who had made the assault charge against Captain Bachman go away. As one of the commissioners of the township of North Bergen, Buesser oversaw the municipal relief office, which happened to employ the brothers Joe and Jimmy Kelly. Joe Kelly had worked for Lud Shabazian in the sports department of the Hudson Dispatch; Jimmy Kelly was in charge of case No. 2796, Braddock's case. Eventually questions would be raised about the legitimacy of Braddock's application and the decision to grant him relief. But in early 1934, when Jim Braddock was just another young man down on his luck, no one seemed to pay much attention. If people had been paying attention, they would almost certainly have come to the conclusion that despite the appearance of impropriety, Braddock was a worthy candidate for relief.

* * * * *

When Jim and Mae were on relief, receiving $24 a month for 10 months, they reached a point when they could no longer care for their children. For a brief time the children were sent to live with their grandparents, who were also barely surviving. All this time Braddock was trudging to and from the docks. Sometimes, when there were no ships to unload, he worked as a furniture mover. He also worked in a coal yard. The one constant was the manual nature of his labor, except when he was tending bar. On the docks he operated a tie hook, which he had to attach to each railroad tie with a swift punching motion. Once it was attached, he would lift the tie and haul
it to a flatbed railroad car. When Braddock first used a tie hook, he tried using his right hand, but the pain was too great. For no other reason than the fact that he had no choice, he made himself ambidextrous; for a while, actually, he was unidextrous, using only his left hand.

Finally, by April, when the weather broke, Braddock's right hand had healed. Soon he was feeling stronger than he had ever felt. But he was still on the docks, staring across the Hudson at the Manhattan skyline. The Garden, where he had once starred, could almost be discerned. Never, though, had it felt farther away.
ESPN anchor and national correspondent Jeremy Schaap is a host of "Outside The Lines" and "SportsCentury." "Cinderella Man" by Jeremy Schaap. Copyright (c) 2005 by Jeremy Schaap. Excerpted and reprinted by permission of Houghton Mifflin Company. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

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Schaap: An excerpt from "Cinderella Man"

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Jun 10, 2005 Jeremy SchaapSportsCenter Reporter/Host, Classic Sports Reporters Close Jeremy Schaap is an ESPN anchor and national correspondent, based in New York since 1998. He is a New York Times best-selling author ("Cinderella Man: James J. Braddock, Max Baer, and the Greatest Upset in Boxing History") and a contributor to "ABC World News Tonight" and "Nightline."

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It is important to share the story of the Great Depression because it was the worst economic struggle in history that last 10 years. This left millions of people in a panic that took 25 years for the situation to recover and communities to get back on their feet. Since this historic event is so important when it comes to economic downfall, as a society today that can change history from occurring like the magnitude of the Great Depression, we can learn the important lessons that came after the depression. Many factors came to play when it comes to the importance of why the depression happened or was a negative impact. Abandonment, high demands of supplies, and unemployment increased the outcomes of the events within the Great Depression. With Americans learning to respond and transform, essentially bounce back, would allow protection of not having such horrible events to the economic and income culture that happened in the depression happen again. Without learning and sharing the story of the Great Depression how can we get younger generations to take economic downfalls seriously or apply value levels of thinking to turn an event like the Great Depression into a turn around event?

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