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The Similarities between the Great Depression and the Current Recession
On October 29, 1929, America had what is now known as ‘Black Thursday’. Black Thursday was when the stock market crashed. After black Thursday, America’s economy that was already having trouble, started getting worse and worse. People couldn’t pay their loans from banks, people were losing their jobs, losing their homes and many people couldn’t provide for their families.
During the beginning of the Great Depression, and during the aftermath of Black Thursday, President Herbert Hoover tried to reassure America that the economy was stable. But the American people didn’t agree.
In the 1932 Presidential Election, Herbert Hoover was defeated, and Franklin D. Roosevelt was elected by a landslide. After his election, people felt a new feeling of hope and confidence in the country. Similar to President Obama’s Election.
On March 4, 1933, thousands of Americans descended to the Nation’s capital to watch their new President’s inauguration ceremony. After his inauguration speech, people had real confidence that things were going to get better.
Shortly after President Roosevelt took office, He developed a new economic plan to end the Depression, The New Deal. Slowly, the New Deal started creating more jobs, and the Economy began to recover. By the end of the 1930’s the United States was out of the Depression.
There are many similarities between the Great Depression and the Recession we are in now. At the beginning of this recession, Our Stock Market, the ‘DOW’, began having out of control days. One day it even fell 600 points. It was northing like Black Thursday, but it made Americans become very worried. After that, more Americans began losing their jobs, houses were getting foreclosed and a lot of Americans began having to worry about how to provide for their families. Throughout this, President Bush tried to reassure Americans that the economy was stable, but many Americans didn’t agree. Similar to the Great Depression.
On January 20, 2009, when Barack Obama was inaugurated, Americans once again felt that same hope and optimism. Shortly after taking office, on February 17, 09, President Obama signed his Economic Stimulus Package into law.
Many of the things that happened during the Depression, happened to us during this recession, but during the Depression, things were a lot worse. The New Deal worked for America back then, and hopefully the Stimulus Package will work now.
We are not out of the Recession yet, but many polls are starting to show that many Americans believe that we are beginning to come out of the Recession.
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This article has 8 comments.
I love how you skipped over the entire depression and stated absolutely nothing that took place.
/copy paste thread:
For 80 years now, it has been the common wisdom that FDR’s massive government interventions in the economy saved our country and ended the Great Depression. All rhetoric about the need to “do something” comes from our understanding of what happened during the great depression , starting at the time of the stock market crash on Black Tuesday, October 29, 1929.
The common wisdom has told us this: the stock market crashed in October 29, 1929 and President Herbert Hoover, despite all criticism, rejected intervening in the economy. The market crash escalates into depression. Then comes 1933 and Franklin Delano Roosevelt is inaugurated President of the United States. He and his “Brain Trust” establish federal programs to alleviate the effects of the Depression. After years of massive intervention and relentless economic micromanagement, the Depression ends and we now learn in school that FDR saved America!
In actuality, Herbert Hoover had intervened greatly into the economy. This is contrary to everything we have ever been told about what took place. Anyway, the market crashes and two months later, the unemployment rate peaks at 9%. There is yet to be any government intervention at this point. The unemployment rate begins to fall irregularly, falling to 6.3% at June, 1930. This month, June 1930, the Smoot-Hawley Tariff bill is passed despite an appeal from over 1000 economists saying “don’t do it”! Two months later, the unemployment rate hits double digits for the first time during this period. The unemployment rate eventually peaks at 25%, not falling below 10% unemployment for the remainder of the decade. After the tariffs are passed, the number of imports and exports fall over 60%.
1933 comes along. FDR is now President. He puts in place the National Recovery Act(NRA), Agricultural Adjustment Act(AAA), Wagner Act, and issued more executive orders than all subsequent presidents for the remainder of the 20th century. So, the government intervenes on a massive scale and yet the unemployment rate never falls below double digits.
The all important question: what did get us out of the Great Depression? The war! WWII got us out of the Great Depression. What the war did was that FDR replaced Dr. New Deal with Dr. Win the War. The war put an end to the New Deal. Despite the merits of the New Deal, which created uncertainty which leads people to be reluctant to part with their money, it gave a tremendous amount of certainty such as cost-plus contracts for militaries equipment suppliers. So, despite the merits of intervention, it brings up the question of when the government is going to intervene again, leaving people unwilling to part with their money.
This is a lesson not learned by many and continues on today.
