Great depression how long did it last

Kimberly Amadeo is an expert on U. She is the President of the economic website World Money Watch. As a writer for The Balance, Kimberly provides insight on the state of the present-day economy, as well as past events that have had a lasting impact. He has worked more than 13 years in both public and private accounting jobs and more than four years licensed as an insurance producer.

His background in tax accounting has served as a solid base supporting his current book of business. The Great Depression was a worldwide economic depression that lasted 10 years. That terrified the public because the crash cost more than World War I. The Depression had begun earlier in August when the economy contracted. The Great Depression affected all aspects of society. Wages for those who still had jobs fell.

Panicked government leaders passed the Smoot-Hawley tariff in to protect domestic industries and jobs, but it actually worsened the issue. Germans were already burdened with financial reparations from World War I. That caused hyperinflation. The Depression caused many farmers to lose their farms. Thousands of these farmers and other unemployed workers migrated to California in search of work. According to Ben Bernanke, a past chairman of the Federal Reserve, the central bank helped create the Depression.

It used tight monetary policies when it should have done the opposite. According to Bernanke, these were the Fed's five critical mistakes:. The Fed did not put enough money in circulation to get the economy going again. Instead, the Fed allowed the total supply of U.

Later research has supported parts of Bernanke's assessment. The standard of living declined due to wartime shortages caused by rationing , and taxes rose dramatically to fund the war effort.

Although the notion that the war ended the Great Depression is a broken window fallacy , the conflict did put the United States on the road to recovery. The war opened international trading channels and reversed price and wage controls. Government demand opened up for inexpensive products, and the demand created a massive fiscal stimulus.

The stock market broke into a bull run in a few short years. The Great Depression was the result of an unlucky combination of factors, including a flip-flopping Fed, protectionist tariffs, and inconsistently applied government interventionist efforts. This period could have been shortened or even avoided by a change in any one of these factors. While the debate continues as to whether the interventions were appropriate, many of the reforms from the New Deal, such as Social Security, unemployment insurance, and agricultural subsidies , exist to this day.

The assumption that the federal government should act in times of national economic crisis is now strongly supported. This legacy is one of the reasons the Great Depression is considered one of the seminal events in modern American history. It's hard to pinpoint exactly what specific factor caused the Great Depression. But economists and historians generally agree that there were several mitigating factors that led to this period of downturn.

These include the stock market crash of , the gold standard, a drop in lending and tariffs, as well as banking panics, and contracted monetary policies by the Fed. The Great Depression started following the stock market crash of , which wiped out both private and corporate nominal wealth.

This sent the U. The Great Depression ended in Most economists cite this as the end date, as this was the time that unemployment dropped and GDP increased. Federal Reserve History. Federal Reserve Bank of Minneapolis. Accessed and downloaded Sept. Bureau of Labor Statistics. Federal Reserve Bank of St.

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The Great Depression — The longest and deepest downturn in the history of the United States and the modern industrial economy lasted more than a decade, beginning in and ending during World War II in Men study the announcement of jobs at an employment agency during the Great Depression.

Bibliography Bernanke, Ben. Written as of November 22, See disclaimer. Related People Marriner S. Eccles Governor Board of Governors — Over the next several years, consumer spending and investment dropped, causing steep declines in industrial output and employment as failing companies laid off workers. Throughout the s, the U. The stock market, centered at the New York Stock Exchange on Wall Street in New York City , was the scene of reckless speculation, where everyone from millionaire tycoons to cooks and janitors poured their savings into stocks.

As a result, the stock market underwent rapid expansion, reaching its peak in August By then, production had already declined and unemployment had risen, leaving stock prices much higher than their actual value. Additionally, wages at that time were low, consumer debt was proliferating, the agricultural sector of the economy was struggling due to drought and falling food prices and banks had an excess of large loans that could not be liquidated. The American economy entered a mild recession during the summer of , as consumer spending slowed and unsold goods began to pile up, which in turn slowed factory production.

Nonetheless, stock prices continued to rise, and by the fall of that year had reached stratospheric levels that could not be justified by expected future earnings. On October 24, , as nervous investors began selling overpriced shares en masse, the stock market crash that some had feared happened at last.

A record As consumer confidence vanished in the wake of the stock market crash, the downturn in spending and investment led factories and other businesses to slow down production and begin firing their workers. For those who were lucky enough to remain employed, wages fell and buying power decreased. Many Americans forced to buy on credit fell into debt, and the number of foreclosures and repossessions climbed steadily. The global adherence to the gold standard , which joined countries around the world in a fixed currency exchange, helped spread economic woes from the United States throughout the world, especially Europe.

Despite assurances from President Herbert Hoover and other leaders that the crisis would run its course, matters continued to get worse over the next three years. By , 4 million Americans looking for work could not find it; that number had risen to 6 million in In , severe droughts in the Southern Plains brought high winds and dust from Texas to Nebraska, killing people, livestock and crops.

In the fall of , the first of four waves of banking panics began, as large numbers of investors lost confidence in the solvency of their banks and demanded deposits in cash, forcing banks to liquidate loans in order to supplement their insufficient cash reserves on hand.

Bank runs swept the United States again in the spring and fall of and the fall of , and by early thousands of banks had closed their doors.