1 ene 1929 año - Stock market crash->Great Depression

Descripción:

By the last years of the 1920s, the mass consumer society that had emerged after World War I was in trouble. The pace of consumption slowed considerably, and the American economy as a whole was mired in debt. Consumer lending had become the tenth largest business in the country, topping $7 billion that year. Millions of farmers were trapped in the same annual cycle of debt as their forebears, and global agricultural markets were saturated, which drove down farm income. As demand for both manufactured goods and farm produce flagged, a vicious cycle ensued. Firms and farms went bankrupt and laid off workers. Unable to collect debts, banks began to fail. Warnings about the dangers of rapid growth, in which industrial production far outstripped demand, and easy credit proved painfully right. The boom that had made the 1920s “roar” stumbled and collapsed by the end of the decade, culminating in the Great Depression. The good times had been brief, the era’s economic expansion lasting only seven years, from 1922 to 1929.

The depression’s precipitating event was a massive collapse of the stock market. Easy credit had fueled years of excessive stock speculation, which inflated the value of traded companies well beyond their actual worth. In a series of plunges between October 25 and November 13, 1929, the stock market lost approximately 40 percent of its value, more than the total cost to all the combatant nations of World War I. Not a mere one-day event but rather three weeks of sharply declining prices, the crash was a symptom of a weakening economy, but few onlookers understood the magnitude of the crisis. Sharp downturns had been a familiar part of the industrializing economy since the 1830s; panics tended to follow periods of rapid growth and speculation. The market recovered again in late 1929 and early 1930, and while a great deal of money had been lost, most Americans believed the aftermath of the crash would be brief.

In fact, the nation had entered the Great Depression, the most severe economic downturn to that point in the nation’s history — as well as a global phenomenon, with major European and South American economies also tumbling into crisis. Over the next four years, industrial production fell 37 percent. Construction plunged 78 percent. Prices for crops and other raw materials, already low, fell by half. By 1932, unemployment had reached a staggering 24 percent

A precipitous drop in consumer spending deepened the crisis. Facing hard times and unemployment, Americans cut back dramatically, creating a vicious cycle of falling demand and forfeited loans. Buying homes, cars, and appliances on credit had seemed like a good deal in 1925; by 1930 the deal turned sour. That year, several major banks went under, victims of overextended credit and reckless management. The following year, as industrial production slowed, a much larger wave of bank failures occurred, sending out even greater shockwaves. Since the government did not insure bank deposits, accounts in failed banks simply vanished.

Not all Americans were devastated by the depression; the middle class did not disappear and the rich still lived in relative luxury. But incomes plummeted even among workers who kept their jobs. Barter systems developed, as barbers traded haircuts for onions and potatoes and laborers took payment in produce or pork. “We do not dare to use even a little soap,” reported one jobless Oregonian, “when it will pay for an extra egg, a few more carrots for our children.” “I would be only too glad to dig ditches to keep my family from going hungry,” wrote a North Carolina man.

Where did desperate people turn for aid? Their first hope lay in private charity, especially churches and synagogues. But by the winter of 1931, such institutions were overwhelmed by extraordinary need. Only eight states provided even minimal unemployment insurance. There was no public support for the elderly, statistically among the poorest citizens. Few Americans had any retirement savings, and many who did save lost it all to bank failures.

Even those who stayed afloat had to adapt to depression conditions. Couples delayed marriage and had fewer children. As a result, the marriage rate fell to a historical low, and by 1933 the birthrate dropped from 97 births per 1,000 women, its high the previous decade, to 75. Responsibility for birth control largely fell to women, becoming “one of the worst problems of women whose husbands were out of work,” a Californian told a reporter. Campaigns against hiring married women were common, on the grounds that any available jobs should go to male breadwinners. Three-quarters of the nation’s school districts banned married women from working as teachers — ignoring the fact that many husbands were less able to earn than ever before. Despite such restrictions, female employment increased in the depression years, as women expanded their financial contributions so families could make ends meet.

The depression hit every part of the country, though its severity varied from place to place. Bank failures clustered heavily in the Midwest and plains, while areas dependent on timber, mining, and other extractive industries suffered catastrophic declines. Although southern states endured less unemployment because of their smaller manufacturing base, farm wages plunged. In many parts of the country, unemployment rates among black men were double that of white men; joblessness among African American women was triple that of white women.

By 1932, the magnitude of the crisis was clear, and voters wanted bold action in Washington. A few years earlier, with business booming and politics placid, people had chuckled when President Coolidge disappeared on extended fishing trips. Now, in the election of 1932, Americans decisively rejected the probusiness, antiregulatory policies of the previous decade. Faced with economic cataclysm, Americans would transform their government and create a modern welfare state.

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