This is a timeline of significant events leading up to and during the Great Depression
During World War I, federal spending grew much larger than tax collections. The government cut back spending to balance the budget in 1920, and a severe recession resulted. However, the war economy invested heavily in manufacturing and the next decade would see an explosion of productivity.
The Supreme Court strikes down federal child labor legislation.
Supreme Court abolishes minimum wage for women in the District of Columbia.
The stock market begins to rise. This has little relation to the rest of the economy.
The top tax rate is lowered to 25 percent, which is the lowest top rate since World War I.
Between May 1928 and September 1929, the average prices of stocks rose 40 percent. This sudden boom was a false appearance.
An average of 600 banks have failed. •Organized labor declined throughout the decade. For example, the United Mine Workers Union saw its membership fall from 500,000 in 1920 to 75,000 in 1928. The American Federation of Labor fell from 5.1 million in 1920 to 3.4 million in 1929. •Over the years, about 1,200 mergers will swallow up more than 6,000 previously independent companies; by 1929, only 200 corporations will control over half of the American industry. •By the end of the decade, the bottom 80 percent of all income-earners will be removed from the tax rolls completely. Taxes on the rich fell throughout the decade. •By 1929, the richest 1 percent will own 40 percent of the nation's wealth. •Individual worker productivity rises an astonishing 43 percent from 1919 to 1929, however the rewards are being funneled to the top. For example, the number of people reporting half-million dollar incomes grows from 156 to 1,489 between 1920 and 1929, is a phenomenal rise compared to other decades, but that is still less than 1 percent of all income-earners.
•Herbert Hoover becomes President. •Annual per-capita income is $750 and more than half of all Americans are living below a minimum subsistence level. •Backlog of business inventories is growing larger each year. •Recession begins in August, two months before the stock market crash. During this time, production declined at an annual rate of 20 percent, wholesale prices at 7.5 percent, and personal income at 5 percent. •The unfortunate Stock market crash began October 24. Investors call October 29 Black Tuesday because the losses for the month will total about $16 billion.
•By February, the Federal Reserve has cut the prime interest rate from 6 to 4 percent. Treasury Secretary Andrew Mellon announces that the Fed. will stand by as the market works itself out: 'Liquidate labor, liquidate real estate... values will be adjusted, and enterprising people will pick up the wreck from less-competent people'. •The Smoot-Hawley Tariff passes on June 17. With imports forming only 6 percent of the GNP, the 40 percent tariffs work out to an effective tax of only 2.4 percent per citizen. Even this is compensated for by the fact that American businesses are no longer investing in Europe, but keeping their money stateside. The theory of modern economists is that the tariff made only a minor contribution to the Great Depression in the U.S., but a major one in Europe. •Supreme Court rules that the monopoly U.S. Steel does not violate anti-trust laws as long as competition exists, no matter how negligible. •The GNP falls 9.4 percent from the year before. The unemployment rate climbs from 3.2 to 8.7 percent.
•No major legislation is passed addressing the Depression. •The GNP falls again, while unemployment rises to 15.9 percent.
•This and the next year are the worst years of the Great Depression. For 1932, GNP falls a record 13.4 percent; unemployment rises to 23.6 percent. •Industrial stocks have lost 80 percent of their value since 1930. •10,000 banks have failed since 1929. •GNP has also fallen 31 percent since 1929. •Over 13 million Americans have lost their jobs since 1929. •International trade has fallen by two-thirds since 1929. •Congress passes the Federal Home Loan Bank Act and the Glass-Steagall Act of 1932. •Top tax rate is raised from 25 to 63 percent. •Popular opinion considers Hoover's measures too little too late. Franklin Roosevelt defeats Hoover in the election. Democrats win control of Congress.
• After Roosevelt's inauguration; the 'First 100 Days'; of intensive legislative activity begins. •A third banking panic occurs in March. Roosevelt declares a Bank Holiday; closes financial institutions to stop a run on banks. •Alarmed by Roosevelt's plan to redistribute wealth from the rich to the poor, a group of millionaire businessmen, led by the Du Pont and J.P. Morgan empires, plans to overthrow Roosevelt with a military coup and install a fascist government modelled after Mussolini's regime in Italy. The businessmen try to recruit General Smedley Butler, promising him an army of 500,000, unlimited financial backing and generous media spin control. The plot is foiled when Butler reports it to Congress. •Congress authorizes creation of the Agricultural Adjustment Administration, the Civilian Conservation Corps, the Farm Credit Administration, the Federal Deposit Insurance Corporation, the Federal Emergency Relief Administration, the National Recovery Administration, the Public Works Administration and the Tennessee Valley Authority. •Congress passes the Emergency Banking Bill, the Glass-Steagall Act of 1933, the Farm Credit Act, the National Industrial Recovery Act and the Truth-in-Securities Act. •Roosevelt does much to redistribute wealth from the rich to the poor, but is concerned with a balanced budget. He later rejects Keynes' advice to begin heavy deficit spending. •The free fall of the GNP is significantly slowed; it dips only 2.1 percent this year. Unemployment rises slightly, to 24.9 percent.
•Congress authorizes creation of the Federal Communications Commission, the National Mediation Board and the Securities and Exchange Commission. •The economy turns around: GNP rises 7.7 percent, and unemployment falls to 21.7 percent. A long road to recovery begins. •Also, Sweden becomes the first nation to recover fully from the Great Depression. It has followed a policy of Keynesian deficit spending.
•The Supreme Court declares the National Recovery Administration to be unconstitutional. •Congress authorizes creation of the Works Progress Administration, the National Labor Relations Board and the Rural Electrification Administration. •Congress passes the Banking Act of 1935, the Emergency Relief Appropriation Act, the National Labor Relations Act, and the Social Security Act. •In addition, economic recovery continues: the GNP grows another 8.1 percent, and unemployment falls to 20.1 percent.
•Top tax rate raised to 79 percent. •Economic recovery continues: GNP grows a new record of 14.1 percent, while unemployment falls to 16.9 percent.
•The Supreme Court declares the National Labor Relations Board to be unconstitutional. •Roosevelt tries to enlarge and liberalize the Supreme Court. This attempt not only fails, but makes the public very mad. •Economists believe economic growth so far is due to heavy government spending when money is already falling short. Roosevelt, however, fears an unbalanced budget so he cuts spending for 1937. That summer, the nation plunges into another recession. Despite this, the yearly GNP rises 5.0 percent, and unemployment falls to 14.3 percent.
•Since Roosevelt's political power was weakened by this time in his Presidency, the New Deal legislation did not pass. •In addition to, the year-long recession is recognized as the Gross National Product (GNP) falls 4.5 percent, and unemployment rises to 19.0 percent.
•The preparations for World War II such as borrowing and spending money to build up the nations armed forces stimulated the American economy and brought a close to the Great Depression. For example, when the Japanese decided to attack Pearl Harbor, U.S. manufacturing rose by about 50 percent! •World War II finally began when Hitler first invaded Poland.
•With WWII came great tragedy, however the United States was still able to emerge as the world's only economic superpower. The loss of spending in the business field resulted in national debt except for America who during this time would experience the greatest economic boom it had ever known.
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