Thursday, December 1, 2016

On the Great Depression, 1929-39

On the Great Depression, 1929-39: Contrary to popular belief, the Great Depression was not simply a decade-long downturn of the American economy. In fact, the Depression occurred in other countries around the world as well. Additionally, there were even periods of prosperity during parts of the 1930s. Yet it was events at the beginning (Black Thursday in 1929) and at the end (1937-38 Recession) of the decade that caused the most economic hardship. Perhaps what best captured that hardship were the unemployment statistics. At times during the 1930s, nearly 25% of the American workforce had no official (wage) income. And two basic (complementary) reasons for this high unemployment rate have often been cited by historians and economists: overproduction and underconsumption. With overproduction, economists pointed to the massive output of industrial goods (in the 1920s) by car companies like Ford and steel companies such as U.S. Steel. Workplace advancements like the assembly line and scientific management had made the 1920s into a mass-production decade. But when demand collapsed in the early 1930s, many companies took awhile to scale back their outputs. Similarly, many consumers could no longer afford to purchase these goods. Yet if you could pinpoint two goods that Americans refused to give up during the Depression, it was their cars and radios. Houses became afterthoughts.

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