As is true of any century, the 20th century is memorable for some phenomenal events and times that will always stand out in any history book of the era. Along with the two world wars and other significant conflicts, the sixties revolution, the moon landing and the development of the internet might rank as such highly significant events we will always associate with the 20th century.
But there can be no doubt that one of the most culture changing events of the 20th century that altered the course of the economy, politics and how the country thought about itself was the Great Depression that occurred in the 1930s. While the Great Depression is very much an event we associate with the 1930s, most historians put the beginning of the financial collapse at the stock market in 1929. But such huge cataclysmic don’t just happen.
No doubt, many of the reasons for the Great Depression of the 1930s dates back to the end of World War I and the tremendous economic drain such a conflict has on a society. The almost giddy excesses of the 1920s may have had much to do with the final downfall of the economy beginning in 1929 and extending well into the 1930s and beyond.
One good outcome of the Great Depression of the 1930s is that the financial institutions of the country along with the government learned much about how such a massive financial collapse progresses. That knowledge has been used time and time again since the 1930s Great Depression to stop the cycle of financial shut down that could cause the same kind of economic catastrophe to happen, accompanied by the tremendous suffering that occurred throughout the 1930s.
The stock market crash of 1929 was not an isolated incident in history. The ramifications of it were like a tidal wave of economic calamity that eventually turned into the Great Depression of the 1930s. The most significant and devastating event to hit right after the stock market crash was a wave of bank failures that functionally brought the financial sector of the country to a grinding halt. In 1930 alone, 9000 banks failed.
These failures predated the coming of federally insured deposits so when a bank went belly up, all of the assets that belonged to the customers of the bank disappeared as well. Huge fortunes and the entire economic security of millions of people simple disappeared. What few people did get to the bank to pull out their money before the banks collapsed caused a run on the banks, which drained their vaults of the small amount of assets they had and caused more banks to fold.
The subsequent constriction of the economy of America had ramifications around the world. The retail sector collapsed because people began to horde their money and not spend it on anything but essentials. Without a consistent flow of revenue, businesses could not pay their loans and they collapsed as well. What banks avoided closure hoarded their funds and refused to give loans so farmers went out of business and no new industry was able to get moving again.
It took all of the decade of 1930s and well into the 1940s before the complete economic decline of the Great Depression of the 1930s was reversed. It also took some very serious intervention at the government level to get people working again and to get the economic institutions up and functional so we could have a working economy once more.
We can only hope that the lessons learned by the Great Depression of the 1930s are lessons that will stay with us for decades if not centuries so the country never endures the terrible suffering that came with this terrible economic collapse.