The Great Depression

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The Great Depression

There had been financial panics before, and there have been some since, but never did a collapse in the market have such a devastating and long-term effect. Like a snowball, it formed and swept away the whole economy before it. Businesses closed, putting millions out of work. Banks failed by the hundreds. Wages for those who were fortunate enough to still have work fell drastically. The value of money decreased as the demand for goods declined. The international structure of world trade collapsed, and each nation sought to protect its own industrial base by imposing high tariffs on imported goods. This only made matters worse. By the fall of 1931, the international gold standard had collapsed, further damaging any hope for the recovery of trade. This started a series of currency devaluations in several countries, because these nations realized that a devalued currency posed at least a temporary advantage in the struggle to find markets for their goods.

This was the start of the Great Depression of 1929 to 1940, which began and centered in the United States but spread quickly throughout the industrial world. By 1932, United States industrial output had been cut in half. One fourth of the labor force (about 15 million people) was out of work, and there was no such thing as unemployment insurance. Hourly wages had dropped by about 50 percent. Prices for agricultural products dropped to their lowest level since the Civil War. More than 90,000 businesses failed completely.

For nearly every unemployed person, their were dependents who needed to be fed and housed. This massive poverty and hunger had never before been known in the United States. Former millionaires stood on street corners trying to sell apples at 5 cents apeice. Hundreds of pitiful shantytowns, called Hoovervilles in honor of the unfortunate Republican president who presided over the disaster, sprang up all over the country to shelter the homeless. People slept under "Hoover blankets" (old newspapers) in the out-of-doors. People waited in bread lines in every city, hoping for something to eat. In 1931 alone, more than 20,000 Americans committed suicide. The theme song of the time was "Brother, Can You Spare a Dime?"

For anyone who did have money, depression America was a shopper's paradise. A new home could be bought for less than $3,000. A man's suit costed about $10, a shirt about 50 cents, and a pair of shoes about $4.

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