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The Great Depression
Who paid for it
Eight steps, about twelve minutes, a question at each. You need no economics and no preparation, only a willingness to guess before you are told.
Step 1 of 8
Britain stopped trading pounds for gold in September 1931 and began recovering within months, while the countries that stayed on gold went on falling. Tariffs went up almost everywhere and world trade fell by about a third.
The question
President Herbert Hoover did act. He put $1.5 billion into public works and set up a government lender in January 1932, and it was far too small against a collapse of this size. Drought struck the plains states through the 1930s on top of it, and farming families lost their living for reasons no policy in Washington had caused.
The unemployment rate is the number most often quoted for the 1930s, and it hides much of the damage. Between 1929 and 1933 the pay of American factory workers fell sharply for every hour worked. The working week was cut as well, so the people who stayed in work still lost a large part of what they earned.
None of that was being measured at the time, and the United States had no figure for what the country earned in a year until a senator ordered one in 1932 and it arrived in January 1934. What the state did count set the limit on who it could reach, and the pensions law of 1935 left out farm workers and domestic servants, while the unemployment figures now quoted for the 1930s were built by the Bureau of Labor Statistics in 1945, six years after the decade ended.
Eight steps on who carried the cost, and why it is so hard to see.
What this module covers
Written for every level. Tap any underlined word for what it means, and open the boxes below for the economics behind each decision. If you already know the theory, skip both and the history reads straight through.
When an economy stops, somebody has to start it again. The question is who, and with how much.
President Herbert Hoover put $1.5 billion into public works and set up a government lender, and the fall did not turn.
Public works are roads, dams and buildings paid for by the government so that people have work.
The lender was the Reconstruction Finance Corporation, set up on 22 January 1932 to lend to banks, railways and other companies in trouble.
Hoover is remembered as the president who did nothing, and the record shows a man doing a great deal.
Take a guess. You are not expected to know the answers, and being wrong is what makes a number stick.
Hoover put $1.5 billion into public works and built a government lender. Why is he still remembered as the president who did nothing?
For scaleThe Reconstruction Finance Corporation was established on 22 January 1932.
Drought struck the farming country of the middle United States through the 1930s, and farming families lost their living for a reason no policy in Washington had caused.
The drought was at its most severe across the southwestern Great Plains, the wide flat farming land in the middle of the country.
Dry conditions ran from the Appalachian mountains in the east to the Rocky Mountains in the west.
Farming families who cannot earn cannot buy, and no policy in Washington could undo the weather.
The drought was caused by no government and could be ended by none. So why did it make the Depression worse?
For scaleThe drought ran through the 1930s, and the institutions that record it disagree about which year it began.
Between 1929 and 1933 the pay of American factory workers fell by 21.4 per cent an hour.
Because it was not counted at the time, so every figure is a reconstruction, and reconstructions differ. The Bureau of Labor Statistics built its estimates in 1945 from tax records, census returns and industry surveys, and it published a table of rival answers alongside its own. A second question changes the answer again: whether somebody on a government relief programme counts as employed or unemployed. Different choices give different figures for the same year.
Hours fell as well, by 13.8 per cent a week. A worker who kept a job often went onto short time, which means fewer hours and a smaller wage at the end of them.
There is a different measure again: the total wage income of the people who kept their jobs.
Keeping a job in 1933 did not mean keeping a wage, and the unemployment figure on its own hides that.
Hourly pay fell 21.4 per cent. For people who kept their jobs, how far did total wage income fall?
For scaleAverage weekly hours fell 13.8 per cent over the same four years.
Module 5 of 7 in The Great Depression
[1] Why there were no figures: Bureau of Economic Analysis, Survey of Current Business, The evolution of US national income accounting.
[2] When the figures were built: Bureau of Labor Statistics, Monthly Labor Review, Stanley Lebergott, Labor force, employment and unemployment 1929-39.
[3] The count that was attacked: US Census Bureau, 1930 Census.
[4] What the figures showed: Congressional Research Service, Labor Market Data: Great Depression vs. Recent Recession, R40655.
[5] What happened to wages: FDR Presidential Library and Museum, Great Depression Facts.
[6] Who the 1935 law covered: Social Security Administration, Larry DeWitt, The decision to exclude agricultural and domestic workers from the 1935 Social Security Act, Social Security Bulletin 70(4).
[7] How many people were out of work: US Department of Labor, History, Chapter 5: Americans in Depression and War.
[8] What the president did, and what the weather did: Herbert Hoover Presidential Library and Museum, The Great Depression.
[9] What happened on the land: Library of Congress, The Dust Bowl, US History Primary Source Timeline.
Country data from the World Bank (CC BY 4.0) and the UNDP Human Development Report (CC BY 3.0 IGO)
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