The Great Depression
The longest and deepest downturn in the history of the modern industrial economy, from a stock market that lost 89 percent of its value to breadlines that ran for a decade
In August 1929 the American economic expansion of the Roaring Twenties ended, and a stock market that had risen sixfold in eight years crashed in October. What followed was the worst economic disaster in American history: the money supply fell by nearly 30 percent, banks failed by the thousands, roughly one quarter of the workforce lost their jobs, and drought turned the Great Plains into a dust bowl. The crisis spread around the globe, helped push Weimar Germany toward the Nazi party, and drove Britain off the gold standard. Franklin Roosevelt's New Deal reshaped the American state, but recovery stalled again in 1937, and full employment did not return until wartime spending arrived with the Second World War. Economists still disagree about what caused the collapse and what ended it.
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- Historiographical debate, 1929 onwardDebated
Reputable source · 2 sourceswhy?
Best source: The Great Depression
The domain "federalreservehistory.org" is on our Reputable source registry.Economists Still Debate What Caused the Depression
There is no single agreed cause of the Great Depression. The monetarist account, set out by Milton Friedman and Anna Schwartz in 1963, holds that a normal downturn became a catastrophe because the Federal Reserve let the money supply fall by nearly 30 percent and did not act as a lender of last resort. A second tradition emphasizes the collapse of spending: the crash and bank failures cut consumption and investment, and once demand fell far enough the economy settled into a low-output trap. A third strand stresses the international gold standard, which transmitted tight money and deflation from country to country. As the Federal Reserve's own history puts it, experts disagreed at the time and researchers debated these issues for decades.
Why it matters: The disagreement is not merely academic. Each account points to a different remedy, whether propping up the money supply, boosting government spending to lift demand, or abandoning fixed exchange rates, and the balance among them has guided how governments and central banks have responded to every major downturn since, including 2008. Reasonable economists still weigh these factors differently.
How we know: The persistence of the debate and the competing positions are stated plainly in the Federal Reserve History overview essay, which notes decades of scholarly disagreement and cites the monetarist Friedman and Schwartz account alongside other interpretations.
Monetarist view: Fed let the money supply collapse (Friedman and Schwartz) · Demand-side view: Spending and investment collapsed · International view: Gold standard spread deflation between nations · Status: No single agreed cause
- 1921-1929 (boom peak September 1929)Well documented
Primary source · 2 sourceswhy?
Best source: The Great Depression and World War II, 1929 to 1945: Overview
The domain "loc.gov" is on our Primary source registry.The Roaring Twenties Fuel a Stock Market Boom on Borrowed Money
The economic expansion of the 1920s reached its loudest on the New York Stock Exchange. The Dow Jones Industrial Average climbed from 63 in August 1921 to 381 by September 3, 1929, a sixfold rise in eight years. Automobiles, telephones, and radios spread through American homes, and a new industry of brokerage houses, investment trusts, and margin accounts let ordinary people buy shares with borrowed funds. A typical buyer put down about 10 percent of a stock's price and borrowed the rest, using the shares themselves as collateral. Borrowed money poured into the market and prices soared. In 1929 the economist Irving Fisher declared that stock prices had reached what looked like a permanently high plateau.
Why it matters: The speculative rise of the late 1920s left the market resting on a wall of debt. Because buyers had borrowed against the stocks they held, a fall in prices could force them to sell to cover their loans, which drove prices down further in a self-feeding spiral. That leverage turned an ordinary market correction into a collapse when confidence broke in October 1929, and it is one reason the Federal Reserve had spent 1928 and 1929 raising interest rates to try to cool the speculation.
How we know: Daily Dow Jones closing prices for 1920 through 1954 are preserved in Federal Reserve economic data, and the mechanics of margin buying are documented in the Federal Reserve History account of the 1929 crash drawing on the records of the Federal Reserve Board and reserve banks.
Dow, August 1921: 63 · Dow peak: 381.17, September 3, 1929 · Typical margin down payment: About 10 percent of the price · Fed response: Raised interest rates in 1928 and 1929 to limit speculation
- October 28-29, 1929Well documented
Reputable source · 2 sourceswhy?
Best source: Stock Market Crash of 1929
The domain "federalreservehistory.org" is on our Reputable source registry.The Stock Market Crashes: Black Monday and Black Tuesday
In September 1929 stock prices began to gyrate, and in October a group of bankers led by National City Bank president Charles Mitchell tried to prop up the market by publicly buying blocks of shares. The effort failed and investors began selling. On Black Monday, October 28, 1929, the Dow fell nearly 13 percent; the next day, Black Tuesday, it dropped almost another 12 percent. By mid-November the Dow had lost roughly half its value. The slide continued until the summer of 1932, when the Dow closed at 41.22, its lowest point of the twentieth century and 89 percent below its 1929 peak. The Dow did not return to its pre-crash high until November 1954.
Why it matters: The crash wiped out the savings of many investors and frightened consumers and businesses alike. Fear cut spending on big-ticket goods bought on credit, so firms like Ford slowed production and laid off workers. The stock market collapse did not by itself cause the Depression, but it marked the end of the boom and helped turn the downturn that began in the summer of 1929 into a deepening contraction.
How we know: The daily index moves are recorded in Federal Reserve economic data and reconstructed in the Federal Reserve History account of the crash, which draws on Federal Reserve Board minutes and the correspondence of reserve bank leaders.
Black Monday: October 28, 1929, Dow down nearly 13 percent · Black Tuesday: October 29, 1929, Dow down almost 12 percent · Low point: Dow 41.22, summer 1932, 89 percent below peak · Recovery to old high: November 1954
- 1929-1941Well documented
Reputable source · 2 sourceswhy?
Best source: The Great Depression
The domain "federalreservehistory.org" is on our Reputable source registry.The Great Depression Begins
The Great Depression began in August 1929, when the expansion of the Roaring Twenties ended, and it lasted more than a decade, ending during the Second World War in 1941. A series of financial crises punctuated the contraction: the stock market crash of 1929, regional banking panics in 1930 and 1931, and 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. Industrial production plummeted, marriage rates fell, and the contraction that began in the United States spread around the globe. Ben Bernanke, later Federal Reserve chairman, called it the worst economic disaster in American history.
Why it matters: The Depression reshaped American government, economic thinking, and daily life for a generation. It produced the New Deal, deposit insurance, Social Security, and a modern central bank, and it left a lasting question at the center of economics: how a wealthy industrial society could fall so far and stay down so long. The scale of the collapse is why later policymakers, including Bernanke during the 2008 crisis, studied it so closely to avoid repeating it.
How we know: The business cycle dates come from the National Bureau of Economic Research, and the sequence of crises is documented across the Federal Reserve History essays written by economists using Federal Reserve records and contemporary data.
Began: August 1929 · Bottom: March 1933, national banking holiday · Ended: During World War II, 1941 · Length: More than a decade
SourcesRelated timelines- History of the United States → · The Depression and New Deal within the wider arc of U.S. history
- 1930Debated
Primary source · 2 sourceswhy?
Best source: Protectionism in the Interwar Period
Cited as a "primary" source (no stronger domain match).The Smoot-Hawley Tariff Raises Duties as World Trade Collapses
The Tariff Act of 1930, known as the Smoot-Hawley tariff after its congressional sponsors, began as a promise by Herbert Hoover during the 1928 campaign to raise duties on farm imports and protect struggling American farmers. Once the revision began, industrial interest groups flooded Congress with requests, and a bill meant for agriculture became a broad increase in tariffs across the economy. Signed in 1930, it entrenched the high protectionism of the earlier Fordney-McCumber tariff at the very moment the world economy was sliding into depression. Other nations retaliated with tariffs of their own, and international trade contracted drastically over the following years.
Why it matters: Smoot-Hawley became a lasting symbol of the beggar-thy-neighbor policies of the 1930s, in which countries tried to protect their own economies in ways that damaged everyone's. It deepened the international dimension of the Depression by helping choke off world trade, and it hardened later economists' consensus that closing borders to trade during a downturn makes the downturn worse.
How we know: The legislative history and the tariff's effects are documented by the U.S. State Department Office of the Historian, which draws on the record of interwar U.S. trade policy, and the source is candid that scholars still disagree about how much of the trade collapse the tariff itself caused.
Formal name: Tariff Act of 1930 · Original purpose: Raise tariffs to protect American farmers · Outcome: Broad tariff increases and foreign retaliation · Debate: Scholars disagree on how much it deepened the Depression
- 1930-1931Well documented
Reputable source · 2 sourceswhy?
Best source: Banking Panics of 1930-31
The domain "federalreservehistory.org" is on our Reputable source registry.Banking Panics Turn a Recession Into the Great Depression
In the fall of 1930 the economy looked poised to recover, since the downturn had lasted about fifteen months, the average length of recent recessions. Then, in November 1930, a series of crises among commercial banks turned an ordinary recession into the beginning of the Great Depression. When the panics began, more than 8,000 commercial banks belonged to the Federal Reserve System, but nearly 16,000 did not, and those nonmember banks operated much as banks had before the Fed existed. Depositors, fearing for their savings, withdrew currency, draining reserves and forcing banks to fail. Annual bank suspensions, under 1,000 a year through the 1920s, began climbing in 1929 and rose toward their 1933 peak.
Why it matters: The banking panics are the moment historians point to when the crisis stopped resembling a normal recession. Each wave of failures destroyed deposits, contracted credit, and spread fear to still-solvent banks. The Federal Reserve, created in part to act as a lender of last resort, failed to stem the collapse, and its inaction became the central charge that later economists, above all Milton Friedman and Anna Schwartz, leveled against it.
How we know: Bank suspension counts come from the Federal Reserve Bulletin of September 1937, and the sequence of the 1930-1931 panics is reconstructed in the Federal Reserve History essay by economist Gary Richardson using contemporary Federal Reserve data.
Panics begin: November 1930 · Fed member banks: Over 8,000 · Nonmember banks: Nearly 16,000 · Bank suspensions, 1920s: Fewer than 1,000 per year, then rising
- Fall 1930 to winter 1933Well documented
Reputable source · 2 sourceswhy?
Best source: The Great Depression
The domain "federalreservehistory.org" is on our Reputable source registry.The Money Supply Collapses and the Fed Fails to Act
From the fall of 1930 through the winter of 1933 the money supply fell by nearly 30 percent as the banking system collapsed. Deflation on that scale raised the real burden of debts, distorted decisions, cut consumption, and pushed banks, firms, and individuals into bankruptcy. The Federal Reserve could have countered the fall by preventing bank collapses or expanding the monetary base, but it did not, held back by a decentralized decision structure, disagreement among its leaders, adherence to the real bills doctrine, and a determination to defend the gold standard by keeping money tight. In 2002 Ben Bernanke told an audience honoring Milton Friedman that regarding the Great Depression, we did it, we're very sorry, and we won't do it again.
Why it matters: This is the heart of the monetarist explanation of the Depression, set out by Milton Friedman and Anna Schwartz in their 1963 Monetary History: the slump became a catastrophe because the Federal Reserve let the money stock collapse. That reading, once contested, later shaped how central banks including Bernanke's Fed responded to the 2008 crisis, when they flooded the system with liquidity rather than letting it drain away.
How we know: The nearly 30 percent fall in the money supply and the Fed's failure to act as lender of last resort are documented in the Federal Reserve History overview essay, which reflects the conclusions of Federal Reserve chairmen and the Friedman and Schwartz monetary history it cites.
Money supply decline: Nearly 30 percent, 1930 to 1933 · Mechanism: Deflation raised debt burdens and forced bankruptcies · Monetarist source: Friedman and Schwartz, A Monetary History, 1963 · Bernanke, 2002: "We did it. We're very sorry. We won't do it again."
- 1930-1936 (worst years)Well documented
Primary source · 2 sourceswhy?
Best source: The Dust Bowl
The domain "loc.gov" is on our Primary source registry.The Dust Bowl Strips the Great Plains
During the 1930s the southwestern Great Plains suffered a severe drought. For decades farmers had plowed up the native prairie grasses to plant wheat, and ranchers had overgrazed the range, stripping away the deep roots that held the soil. With the onset of drought in 1930 the overfarmed, overgrazed land began to blow away. Strong winds raised billowing clouds of dust that darkened the sky for days and buried farm buildings, and nineteen states in the American heartland became a vast dust bowl. Unable to make a living, farm families abandoned their homes and headed west to become migrant laborers, a migration later captured in John Steinbeck's writing.
Why it matters: The Dust Bowl layered an environmental disaster on top of the economic one across the farm belt, driving hundreds of thousands of people off the land at the same time that cities offered no work. It exposed the human cost of unsustainable farming and pushed the New Deal to create soil conservation programs and to plant windbreaks across the Plains, an early large federal response to environmental collapse.
How we know: The causes and course of the Dust Bowl are documented by the Library of Congress in its primary source materials on the Great Depression, drawing on Farm Security Administration photographs and contemporary records.
Trigger: Drought beginning in 1930 · Underlying cause: Plowing under prairie grasses and overgrazing · Extent: Nineteen states became a dust bowl · Human result: Farm families fled west as migrant laborers
Sources- Library of Congress. The Dust Bowl · reference
- Library of Congress. The Dust Bowl (extent) · reference
- September 1931Well documented
Primary source · 2 sourceswhy?
Best source: Going off gold: Treasury statement for the Press on Britain leaving the Gold Standard, 20th September 1931
Cited as a "primary" source (no stronger domain match).Britain Abandons the Gold Standard
By the summer of 1931 investors in Paris and New York had lost confidence in the pound, and the Bank of England was losing gold at an alarming rate. On September 20, 1931, the Treasury announced that Britain had decided, after consultation with the Bank of England, to suspend the Gold Standard Act of 1925, which had required the Bank to sell gold at a fixed price. The Treasury press notice explained that in the last few days the withdrawals of foreign balances had accelerated so sharply that the government felt bound to act. Freed from defending a fixed gold price, the pound fell in value.
Why it matters: Leaving gold let Britain loosen monetary policy and let its currency fall, and studies find this devaluation, coming ahead of the United States and France, decisively benefited the British economy and started its recovery from the Depression. The episode is central to a broader argument in economic history: the countries that broke with gold earliest tended to recover soonest, because the gold standard had been transmitting deflation from one nation to the next.
How we know: The decision is documented in the original Treasury press notice held by the National Archives of the United Kingdom, and its effect on recovery is analyzed in economic research published through the Centre for Economic Policy Research.
Date: September 20, 1931 (announcement) · Suspended: Gold Standard Act of 1925 · Trigger: Accelerating withdrawals of foreign balances · Effect: Devaluation of the pound, start of recovery
Sources- The National Archives (United Kingdom). Going off gold: Treasury statement for the Press on Britain leaving the Gold Standard, 20th September 1931 · primary
- Centre for Economic Policy Research (VoxEU). The end of the gold standard and the beginning of the recovery from the Great Depression · reference
- May-July 1932Well documented
Primary source · 2 sourceswhy?
Best source: The 1932 Bonus Army: Black and White Americans Unite in March on Washington
The domain "prologue.blogs.archives.gov" is on our Primary source registry.The Bonus Army Marches on Washington
In 1924 Congress had promised World War I veterans a service bonus, payable in 1945. With the Depression deepening, desperate veterans decided to march on Washington in 1932 to demand immediate payment. Calling themselves the Bonus Expeditionary Force, they hitched rides and rode freight trains to the capital, where they set up shanty camps, the largest on the Anacostia Flats. Their numbers reached somewhere between 10,000 and 20,000. The House voted to pay the bonus but the Senate rejected it. On July 28, 1932, the Hoover administration sent in troops led by General Douglas MacArthur, with cavalry and infantry, to expel the marchers and burn their camp.
Why it matters: The sight of the U.S. Army driving unarmed veterans and their families out of the capital became a symbol of Hoover's failure to grasp the human cost of the Depression, and it damaged him badly in the 1932 election. The Bonus Army also foreshadowed the mass protest politics of the 1930s, and its integrated camps, where Black and white veterans lived and demonstrated together, stood out in a segregated era.
How we know: The march and its violent end are documented by the National Park Service and by the National Archives, drawing on contemporary newspaper coverage, government records, and photographs of the encampments and their clearing.
Bonus promised: 1924, payable in 1945 · Marchers: Between 10,000 and 20,000 · Camp cleared: July 28, 1932 · Army commander: General Douglas MacArthur
- 1930-1932Well documented
Reputable source · 2 sourceswhy?
Best source: Adolf Hitler and the Nazi Rise to Power, 1918-1933
The domain "encyclopedia.ushmm.org" is on our Reputable source registry.The Depression Helps the Nazis Rise in Germany
The worldwide depression that began in October 1929 hit Germany almost at once, as American loans that had propped up the Weimar economy were called in. By 1932, 6 million Germans were unemployed in a nation of about 60 million. The Nazi party, an unpopular fringe movement in the 1928 election, exploited the crisis: in September 1930 it won 18 percent of the vote to become the second-largest party in parliament, and on July 31, 1932, with unemployment far higher, it won 37 percent to become the largest party. Chancellor Heinrich Bruning had by then taken to ruling by emergency decree, and the Weimar Republic's parliamentary system was breaking down.
Why it matters: The German case is the sharpest example of the Depression's political cost. Economic collapse and mass unemployment drained support from the moderate parties and drove voters toward the extremes, and it was against that background that Hitler was appointed chancellor in January 1933. The link between the economic crisis and the fall of German democracy is one of the reasons the Depression is treated as a cause of the Second World War.
How we know: The German unemployment figures are documented by Facing History and Ourselves, and the Nazi party's electoral rise from 18 percent in 1930 to 37 percent in July 1932 is documented by the United States Holocaust Memorial Museum's Holocaust Encyclopedia.
German unemployed, 1932: 6 million of about 60 million people · Nazi vote, September 1930: 18 percent, second-largest party · Nazi vote, July 1932: 37 percent, largest party · Consequence: Hitler appointed chancellor, January 1933
SourcesRelated timelines- History of Germany → · The Depression's role in the collapse of the Weimar Republic and the Nazi seizure of power is traced in full in the History of Germany timeline.
- 1933 (Depression low point)Well documented
Primary source · 2 sourceswhy?
Best source: The Great Depression and World War II, 1929 to 1945: Overview
The domain "loc.gov" is on our Primary source registry.Unemployment Reaches Roughly One Quarter of the Workforce
Unemployment climbed through the early 1930s as factories closed and farms failed. At the height of the Depression in 1933, 24.9 percent of the total workforce, about 12,830,000 people, was out of work. Farmers, who were not counted among the unemployed, lost land and homes to foreclosure as commodity prices collapsed. Shantytowns of packing crates and scrap, called Hoovervilles after the president, sprang up across the country, and displaced families split apart or migrated in search of work. Over one quarter of the American workforce had no job.
Why it matters: The unemployment figure is the single number that captures how far the economy fell. Roughly one worker in four could not find a job, and there was no federal unemployment insurance to soften the blow until the Social Security Act of 1935. The human scale of that joblessness drove the political demand for federal action that carried Franklin Roosevelt into office and gave the New Deal its mandate.
How we know: The 24.9 percent figure and the count of 12,830,000 unemployed come from the Franklin D. Roosevelt Presidential Library's summary of Depression statistics, and the one-quarter figure is independently stated in the Library of Congress overview of the period.
Peak unemployment: 24.9 percent, 1933 · Number unemployed: About 12,830,000 · Shantytowns: "Hoovervilles" · Safety net: No federal unemployment insurance until 1935
- March 1933Well documented
Reputable source · 2 sourceswhy?
Best source: Bank Holiday of 1933
The domain "federalreservehistory.org" is on our Reputable source registry.Roosevelt Is Elected and Declares a National Banking Holiday
Franklin Roosevelt won the 1932 election after pledging a New Deal for the American people, defeating Herbert Hoover as the public turned against his handling of the crisis. By Roosevelt's inauguration on March 4, 1933, the banking system had collapsed and a fresh wave of runs was draining gold from New York banks. At 1:00 a.m. on Monday, March 6, only thirty-six hours after taking the oath, Roosevelt issued Proclamation 2039, suspending all banking transactions nationwide. For an entire week Americans could not withdraw, transfer, or deposit money. When banks reopened on March 13, examined and certified as sound, deposits flowed back in rather than out.
Why it matters: The banking holiday stopped the runs that had brought the financial system to the point of collapse and bought the new administration time to pass emergency legislation. It also set the tone for the New Deal: fast, sweeping federal action taken in the president's own hand. The successful reopening restored enough confidence that hoarded currency began returning to the banks, a turning point in the immediate crisis.
How we know: The proclamation and the sequence of the March 1933 crisis are documented in the Federal Reserve History account of the bank holiday, which quotes Proclamation 2039 directly and draws on the records of the New York Federal Reserve Bank and Treasury.
Election: 1932, FDR pledged "a New Deal" · Inauguration: March 4, 1933 · Holiday declared: 1:00 a.m., March 6, 1933, Proclamation 2039 · Banks reopened: March 13, 1933
- March-June 1933Well documented
Primary source · 2 sourceswhy?
Best source: The Great Depression and World War II, 1929 to 1945: Overview
The domain "loc.gov" is on our Primary source registry.The Hundred Days Remake the Federal Government
In the first hundred days of his administration, Roosevelt pushed a package of legislation through Congress designed to lift the country out of the Depression. He declared the banking holiday to stop the runs, then created a set of new federal agencies known by their initials. The Agricultural Adjustment Administration tried to raise farm prices, the Civilian Conservation Corps put young men to work on public lands, the Tennessee Valley Authority brought jobs and electricity to a poor rural region, and relief agencies put the unemployed to work on construction and arts projects. Roosevelt used a radio address on July 24, 1933 to describe what his first hundred days had done.
Why it matters: The Hundred Days established a new relationship between Americans and their national government, one in which Washington took direct responsibility for relief, recovery, and reform. The alphabet agencies born in this stretch reshaped agriculture, employment, and regional development, and the phrase itself became the yardstick by which every later president's opening months would be measured.
How we know: The legislative program of the Hundred Days is documented by the Franklin D. Roosevelt Presidential Library, which summarizes the agencies created and quotes Roosevelt's own July 1933 radio address.
Span: First hundred days of the FDR administration, 1933 · Agencies created: AAA, CCC, TVA, FERA, NRA and others · First described publicly: Radio address, July 24, 1933 · Nickname: The "alphabet agencies"
- 1933Well documented
Primary source · 2 sourceswhy?
Best source: Executive Order 6101: Relief of Unemployment Through the Performance of Useful Public Work
Cited as a "primary" source (no stronger domain match).The Civilian Conservation Corps Puts Young Men to Work
Roosevelt created the Civilian Conservation Corps by Executive Order 6101 on April 5, 1933, setting jobless young men to work on public land projects. The order appointed Robert Fechner as director of Emergency Conservation Work and drew an advisory council from the Secretaries of War, Agriculture, the Interior, and Labor. Enrollees prevented forest fires, controlled plant pests, and built and maintained trails and roads in national parks and forests. The corps gave unemployed youth food, shelter, wages, and work at the depth of the Depression while improving the environment. Over its life it enrolled millions of men and planted billions of trees, earning the nickname Roosevelt's Tree Army.
Why it matters: The CCC was among the most popular New Deal programs, turning idle young men into a conservation workforce whose dams, trails, and plantings still shape American public lands. It showed that a federal jobs program could deliver both relief and lasting public works, and it became a model later generations pointed to when arguing for national service.
How we know: The corps's creation is documented in the text of Executive Order 6101 of April 5, 1933, held by the American Presidency Project at the University of California, and its work and popularity are summarized by the Franklin D. Roosevelt Presidential Library.
Created by: Executive Order 6101, April 5, 1933 · First director: Robert Fechner · Work: Firebreaks, pest control, park trails and roads · Nickname: Roosevelt's Tree Army
- June 16, 1933Well documented
Reputable source · 2 sourceswhy?
Best source: Banking Act of 1933 (Glass-Steagall)
The domain "federalreservehistory.org" is on our Reputable source registry.The Glass-Steagall Act Separates Banking and Creates the FDIC
On June 16, 1933, Roosevelt signed the Banking Act of 1933, commonly called the Glass-Steagall Act after Senator Carter Glass and Representative Henry Steagall. It separated commercial banking from investment banking, aiming to keep deposits from being used for stock speculation, and it created the Federal Deposit Insurance Corporation to insure ordinary bank deposits. Glass, a former Treasury secretary, was the driving force; Steagall agreed to back the bill once an amendment added deposit insurance. The measure was written to provide for the safer and more effective use of the assets of banks and to prevent the undue diversion of funds into speculative operations.
Why it matters: Deposit insurance, created by this act, ended the era of banking panics in which frightened depositors could bring down solvent banks by rushing to withdraw cash. The separation of commercial and investment banking shaped the American financial system for more than sixty years until its repeal in 1999. Together the two provisions were among the most durable reforms to come out of the Depression.
How we know: The act's provisions, sponsors, and signing date are documented in the Federal Reserve History essay on the Banking Act of 1933, which quotes the text of the legislation and its legislative history.
Signed: June 16, 1933 · Sponsors: Sen. Carter Glass, Rep. Henry Steagall · Key reform 1: Separated commercial and investment banking · Key reform 2: Created the Federal Deposit Insurance Corporation
- May 1937 to June 1938Well documented
Reputable source · 2 sourceswhy?
Best source: Recession of 1937-38
The domain "federalreservehistory.org" is on our Reputable source registry.The Recession of 1937-38 Interrupts the Recovery
The recovery that began in 1933 stalled sharply in a downturn that ran from May 1937 to June 1938. According to the National Bureau of Economic Research it was the third worst recession of the twentieth century. Real GDP fell 10 percent, unemployment, which had come down considerably after 1933, climbed back to 20 percent, and industrial production fell 32 percent. The usual explanations are a contraction in the money supply caused by Federal Reserve and Treasury actions, together with tighter fiscal policy, after the Fed in 1936 doubled reserve requirements to absorb the large excess reserves banks were holding.
Why it matters: The 1937-38 recession is the standard cautionary tale about withdrawing support from a recovering economy too soon. It hit while millions were still out of work and showed that the economy remained fragile years into the New Deal. Economists still cite it when debating how quickly to unwind emergency stimulus, and it drew fresh attention after the 2008 crisis as a mid-recovery relapse to be avoided.
How we know: The output, unemployment, and production figures and the timing of the recession are documented in the Federal Reserve History essay on the recession of 1937-38, citing National Bureau of Economic Research dates and the scholarly literature.
Dates: May 1937 to June 1938 · Real GDP: Fell 10 percent · Unemployment: Climbed to 20 percent · Industrial production: Fell 32 percent
- 1941-1945Well documented
Reputable source · 2 sourceswhy?
Best source: The Great Depression
The domain "federalreservehistory.org" is on our Reputable source registry.World War II Spending Ends the Depression
Full recovery came only with the Second World War. Federal Reserve historians mark the Depression as ending in 1941, with a return to full output and employment during the war. As the United States mobilized, war spending surged: in 1942 alone the military more than doubled, from 1.8 million to 3.9 million people, pulling the remaining unemployed workers of military age into service, and the government awarded over 100 billion dollars in military contracts in the first six months. Factories that had sat idle ran around the clock building weapons, and businesses raised wages to compete for the workers who were suddenly scarce.
Why it matters: The wartime boom settled, in practice, the debate over how to end a depression by demonstrating what enormous public spending could do to demand and employment. Whether that lesson credits Keynesian fiscal policy or simply reflects the unique scale of war mobilization is still argued, but the timing is not in dispute: the joblessness of the 1930s vanished once the government began spending on the war.
How we know: The end date is stated in the Federal Reserve History overview of the Depression, and the wartime surge in military employment and contracts is documented by the National Park Service account of the World War II home front economy.
Depression ends: During World War II, 1941 · Military, 1942: Grew from 1.8 million to 3.9 million · Contracts, first six months: Over 100 billion dollars · Effect on labor: Remaining unemployed pulled into service
SourcesRelated timelines- World War II → · The mobilization that ended the Depression is one thread of the far larger story told in the World War II timeline.