The Crash of the 20th Century
We all know about the Great Depression and the Stock Market Crash of 1929, but what was it really? Some people just assume that it randomly happened one day in October but it started before that. It began in March 1929 when Herbert Hoover became president and lowered the top income tax rate from 25% to 24%. Then, in August of 1929, the energy from the Roaring 20s hit its peak and started to fizzle out, and the Federal Reserve raised the discount rate from 5% to 6%. These lead up to a day called Black Thursday where the market fell 11% right off the bat. The market that day ended at only 2% loss but then Black Monday hit. The market fell again at 13% and people started to panic. The third wave of the crash was Black Tuesday and the market lost another 12% and sold a record of 16 million shares.
After the crash, the entire country was devastated. People lost their businesses, houses, savings, and more. More than 600 banks failed at this time leaving people with no way to get their money. Due to the failure of banks, money supply decreased dramatically and the value of the dollar increased. Matters only got worse in 1930 when Hoover signed a tariff act into effect to help people, but it ultimately backfired and international trade began to fall apart. In addition, a drought hit 23 states which has become known as the Dust Bowl. The drought kept farmers from being able to produce enough food to feed themselves and others. On top of all these things in the country happening, unemployment was rising to 15% by 1931 and the economy continued to shrink. By the end of 1932, the Dow hit a bottom number of 41.22, dust storms destroyed the Mid-West, unemployment reached 23%, and the economy shrunk by 27% since August of 1929.
Things started to get better when Franklin Delano Roosevelt was elected into office. He started with the New Deal which basically saved the country and economy. This New Deal cut government spending on things, ended Prohibition, and created millions of jobs. While Roosevelt was saving the economy, natural disasters were still hitting the country. 1934 had the worst dust storm on record, 29 days with record high temperatures of 100+ degrees Fahrenheit, and the national debt hit $27 billion. From 1934 to 1938, the United States experienced the worst crisis imaginable. No money, no jobs, no economy. Heat waves and dust bowls hit the country and debt was sky high reaching $37 billion. However, Roosevelt launched so many acts during the New Deal that the economy began to turn around. Franklin Roosevelt even went into a third term as president when World War 2 started. The Stock Market Crash of 1929 and the Great Depression were historical events in the 20th century that effected this country for many generations.
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