From the "New Era" to the Great Illusion: The Growth and Decline of the American Economy 1920-1929

Abstract

The Stock Market Crash of October, 1929 precipitated what was to become the worst depression in the history of the United States and the world. In the U. S., the business cycle downswing was of such magnitude it earned the title "Great Depression" and was the catalyst for fundamental change in the structure of the national political economy. In fact, many historians feel the Depression had even greater impact on U. S. history and government structure than the Civil War, long viewed as a watershed in American political and economic development. Statistical figures on the decline are appalling. In the period between the crash of October, 1929 and the nadir of the Depression in March 1933, the gross national product (GNP) fell by more than 30% or 31.7 billion in 1929 dollars. The unemployment rate jumped from 3.2% in 1929 to over 24% in 1932-1933, the two worst years of the Depression, and did not decline below 14% prior to 1941 and the onset of heavy armaments production. Furthermore, while the 24% figure represents 12 million unemployed persons, these numbers are deceiving. In reality, there were many men who had insignificant part-time jobs for a few hours a week, their exclusion from the unemployment rolls camouflages the true extent to which labor was underutilized.