Important events of the Great Depression

1929

-Backlog of business inventories grows three times larger than the year before. Public consumption markedly down.

-More than half of all Americans are living below a minimum subsistence level.

-Freight carloads and manufacturing fall.

-Automobile sales decline by a third in the nine months before the crash.

-Recession begins in August, two months before the stock market crash. During this two month period, production will decline at an annual rate of 20 percent, wholesale prices at 7.5 percent, and personal income at 5 percent.

-Stock market crash begins October 24. Investors call October 29 "Black Tuesday." Losses for the month will total $16 billion, an astronomical sum in those days.

1930

-The GNP falls 9.4 percent from the year before. The unemployment rate climbs from 3.2 to 8.7 percent.

-By February, the Federal Reserve has cut the prime interest rate from 6 to 4 percent. Expands the money supply with a major purchase of U.S. securities. However, for the next year and a half, the Fed will add very little money to the shrinking economy. (At no time will it actually pull money out of the system.) Treasury Secretary Andrew Mellon announces that the Fed will stand by as the market works itself out: "Liquidate labor, liquidate stocks, liquidate real estate… values will be adjusted, and enterprising people will pick up the wreck from less-competent people."

-The first bank panic occurs later this year; a public run on banks results in a wave of bankruptcies. Bank failures and deposit losses are responsible for the contracting money supply.

1931

-No major legislation is passed addressing the Depression.

-A second banking panic occurs in the spring.

-The GNP falls another 8.5 percent; unemployment rises to 15.9 percent.

1932

-This and the next year are the worst years of the Great Depression. For 1932, GNP falls a record 13.4 percent; unemployment rises to 23.6 percent.

-10,000 banks have failed since 1929, or 40 percent of the 1929 total.

-Top tax rate is raised from 25 to 63 percent.

1933

-A third banking panic occurs in March. Roosevelt declares a Bank Holiday; closes financial institutions to stop a run on banks.

-Alarmed by Roosevelt's plan to redistribute wealth from the rich to the poor, a group of millionaire businessmen, led by the Du Pont and J.P. Morgan empires, plans to overthrow Roosevelt with a military coup and install a fascist government. The businessmen try to recruit General Smedley Butler, promising him an army of 500,000, unlimited financial backing and generous media spin control. The plot is foiled when Butler reports it to Congress.

-U.S. goes off the gold standard.

-The free fall of the GNP is significantly slowed; it dips only 2.1 percent this year. Unemployment rises slightly, to 24.9 percent.

Sound familiar?