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was the deepest and longest-lasting economic downturn in the history
of the Western industrialized world. In the United States, the Great Depression began soon after the stoc mar et crash of !ctober "#$#, which sent Wall Street into a panic and wiped out millions of in%estors. !%er the ne&t se%eral years, consumer spending and in%estment dropped, causing steep declines in industrial output and rising le%els of unemployment as failing companies laid off wor ers. 'y "#((, when the Great Depression reached its nadir, some "( to ") million *mericans were unemployed and nearly half of the country+s ban s had failed. ,hough the relief and reform measures put into place by -resident .ran lin D. /oose%elt helped lessen the worst effects of the Great Depression in the "#(0s, the economy would not fully turn around until after "#(#, when World War II ic ed *merican industry into high gear.
T"# G$#%T D#&$#''()* +#G(*': T"# 'T),- .%$-#T ,$%'" )/ 1929
,he *merican economy entered an ordinary recession during the summer of "#$#, as consumer spending dropped and unsold goods began to pile up, slowing production. *t the same time, stoc prices continued to rise, and by the fall of that year had reached le%els that could not be 1ustified by anticipated future earnings. !n !ctober $2, "#$#, the stoc mar et bubble finally burst, as in%estors began dumping shares en masse. *
record "$.# million shares were traded that day, nown as 3'lac ,hursday.4 .i%e
days later, on 3'lac ,uesday4 some "5 million shares were traded after another wa%e of panic
swept Wall Street. 6illions of shares ended up worthless, and those in%estors who had bought stoc s 3on
margin4 7with borrowed money8 were wiped out completely.
*s consumer confidence %anished in the wa e of the stoc mar et crash, the downturn in spending and in%estment led factories and other businesses to slow down production and construction and begin firing their wor ers. .or those who were luc y enough to remain employed, wages fell and buying power decreased. 6any *mericans forced to buy on credit fell into debt, and the number of foreclosures and repossessions climbed steadily. ,he adherence to the gold standard, which 1oined countries around the world in a fi&ed currency e&change, helped spread the Depression from the United States throughout the world, especially in 9urope.
T"# G$#%T D#&$#''()* D##&#*': +%*- $0*' %*D T"# "))1#$ %D.(*('T$%T()*
S. howe%er. and by early "#(( thousands of ban s had closed their doors. state had ordered all remaining ban s to close at the end of the fourth wa%e of ban ing panics. the first of four wa%es of ban ing panics began. famously declaring that 3the only thing we ha%e to fear is fear itself. =onetheless. which would be able to hire bac their employees. and that it did not ha%e the responsibility to create 1obs or pro%ide economic relief for its citizens. the country+s industrial production had dropped by half. During /oose%elt+s first "00 days in office. forcing ban s to li<uidate loans in order to supplement their insufficient cash reser%es on hand. as large numbers of in%estors lost confidence in the sol%ency of their ban s and demanded deposits in cash. . :e also began addressing the public directly o%er the radio in a series of tal s. /D$ %DD$#''#' T"# G$#%T D#&$#''()* 2(T" T"# *#2 D#%3 :oo%er. 'an runs swept the United States again in the spring and fall of "#(" and the fall of "#($. population at the time8 unemployed. that number had risen to 5 million in "#(". e%ery U.reasury didn+t ha%e enough cash to pay all go%ernment wor ers. and the U.S. belie%ed that go%ernment should not directly inter%ene in the economy. "#((8. In addition. . 'y "#(0. create 1obs and stimulate reco%ery. soup itchens and rising numbers of homeless people became more and more common in *merica+s towns and cities. 6eanwhile.armers 7who had been struggling with their own economic depression for much of the "#$0s due to drought and falling food prices8 couldn+t afford to har%est their crops. Democrat . 'read lines. matters continued to get worse o%er the ne&t three years. creating the . /oose%elt won an o%erwhelming %ictory in the presidential election. /oose%elt sought to reform the financial system. 2 million *mericans loo ing for wor could not find it.ran lin D.Despite assurances from -resident :erbert :oo%er and other leaders that the crisis would run its course.ederal Deposit Insurance >orporation 7. with the country mired in the depths of the Great Depression and some "(-") million people 7or more than $0 percent of the U. In the fall of "#(0. . secretary of commerce. In the face of this dire situation. 'y Inauguration Day 76arch 2.DI>8 to protect depositors+ accounts and the Securities 2 . first announcing a four-day 3ban holiday4 during which all ban s would close so that >ongress could pass reform legislation and reopen those ban s determined to be sound. a /epublican who had formerly ser%ed as U. the idea was that the ban s in turn would loan to businesses.4 /oose%elt too immediate action to address the country+s economic woes.S.D/ 7as he was nown8 pro1ected a calm energy and optimism.S. In "#($. :oo%er+s administration tried supporting failing ban s and other institutions with go%ernment loans. and these so-called 3fireside chats4 went a long way towards restoring public confidence. his administration passed legislation that aimed to stabilize industrial and agricultural production. and were forced to lea%e them rotting in the fields while people elsewhere star%ed.
7ad1usted for inflation8 grew at an a%erage rate of # percent per year. this second se%ere contraction re%ersed many of the gains in production and employment and prolonged the effects of the Great Depression through the end of the decade. T"# G$#%T D#&$#''()*: "%$D $)%D T) $#. In "#(). a permanent 1obs program that employed @. reduced the unemployment rate to below its pre-Depression le%el. With /oose%elt+s decision to support 'ritain and .ennessee ?alley region of the South. during which real GD. the United States was the only industrialized country in the world without some form of unemployment insurance or social security.?*8.)1#$4 *mong the programs and institutions of the =ew Deal that aided in reco%ery from the Great Depression were the . Depression-era hardships had fueled the rise of e&tremist political mo%ements in %arious 9uropean countries. disability and pensions for old age. e%en as the country maintained its neutrality.his e&panding industrial production. which for the first time pro%ided *mericans with unemployment.he Bapanese attac on -earl :arbor in December "#2" led to an *merican declaration of war. as well as widespread conscription beginning in "#2$. producing more and more pri%ate sector 1obs.rance in the struggle against Germany and the other *&is -owers. * sharp recession hit in "#(A. >ongress passed the Social Security *ct. and the Wor s -ro1ect *dministration 7W-*8. the economy continued to impro%e throughout the ne&t three years. caused in part by the . and the nation+s factories went bac in full production mode. When the Great Depression began.and 9&change >ommission 7S9>8 to regulate the stoc mar et and pre%ent abuses of the ind that led to the "#$# crash. most notably that of *dolf :itler+s =azi regime in Germany. 3 . which built dams and hydroelectric pro1ects to control flooding and pro%ide electric power to the impo%erished . German aggression led war to brea out in 9urope in "#(#. defense manufacturing geared up.ederal /eser%e+s decision to increase its re<uirements for money in reser%e. . . .ennessee ?alley *uthority 7. and the W-* turned its attention to strengthening the military infrastructure of the United States.) million people from "#() to "#2(.hough the economy began impro%ing again in "#(@. *fter showing early signs of reco%ery beginning in the spring of "#((.