Page 106 - Accelerating out of the Great Recession

EVEN IN THE WORST OF TIMES

THE GREAT DEPRESSION: A BRIEF HISTORY
“Gentlemen, you have come 60 days too late. The depression
is over.”
With those optimistic words, President Herbert Hoover wel-
comed his guests—a delegation of banking officials and reli-
gious leaders concerned about rising joblessness—to the White
House in June 1930. The U.S. economy was indeed showing
signs of stabilization at the time, and the Harvard Economic
Society even had predicted an upswing during the second half
of 1930. After the Dow Jones Industrial Average fell 36 per-
cent from September to November 1929, it then experienced a
“dead-cat bounce” (a short-lived rise following a sharp
decline) of more than 50 percent growth over the following six
months. But, as we all know now, the worst of the Great
Depression was yet to come.
The Great Depression is a cultural touchstone for many rea-
sons: it was the longest and deepest recession in modern times.
In the United States, real gross domestic product contracted by
26 percent between 1929 and 1933, and consistent growth
returned only with the start of World War II. The financial
meltdown that triggered the economic collapse affected
Americans very directly, more so than in any other financial cri-
sis. More than 9,000 banks (20 percent of the U.S. total)
failed in the 1930s. These failed banks accounted for around
10 percent of total U.S. household savings. What is more, the
Great Depression was more globally interconnected than any
downturn before or after. Economies around the world faltered
and fell, and as governments sought to defend their domestic

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