The Great Depression is endlessly fascinating to me because I can’t imagine something like that happening in modern times in the U.S.
The Great Recession was the worst financial crisis we’ve seen since the 1930s but it was child’s play compared to that period. The Great Recession saw GDP decline 5.1% with the unemployment rate reaching 10% at its peak.
The Great Depression experienced a GDP decline of nearly 27% with a high unemployment rate of 25%. The downturn technically ended in 1932. In that year, wages fell 60% while stock market dividends were slashed 57%.
The images that come to mind when I think about the Great Depression are bread lines, panic on Wall Street, and angry mobs in Washinton DC.
Frederick Lewis Allen describes a different story in his book Since Yesterday:
Walking through an American city, you might find few signs of the Depression visible—or at least conspicuous—to the casual eye. You might notice that a great many shops were untenanted, with dusty plate-glass windows and signs indicating that they were ready to lease; that few factory chimneys were smoking; that the streets were not so crowded with trucks as in earlier years, that there was no uproar of riveters to assail the ear, that beggars and panhandlers were on the sidewalks in unprecedented numbers (in the Park Avenue district of New York a man might be asked for money four or five times in a ten-block walk). Traveling by railroad, you might notice that the trains were shorter, the Pullman cars fewer—and that fewer freight trains were on the line. Traveling overnight, you might find only two or three other passengers in your sleeping car.
Otherwise things might seem to you to be going on much as usual. The major phenomena of the Depression were mostly negative and did not assail the eye.
You also have to remember this downturn hit different groups in many different ways. Allen describes a number of these groups in his book. He does talk about breadlines in the poorer districts and settlements in vacant lots called “Hoovervilles” which were more or less shacks made out of cardboard boxes. There were also so many drifters who hopped from freight car to freight car on the railways that the police gave up trying to stop them.
This was the scene in Chicago in 1932:
One vivid, gruesome moment of those dark days we shall never forget. We saw a crowd of some fifty men fighting over a barrel of garbage which had been set outside the back door of a restaurant. American citizens fighting for scraps of food like animals.
On the other hand, you had those who came up during the new Gilded Age who had a much different experience:
Among the comparatively well-to-do people of the country (those, let us say, whose pre-Depression incomes had been over $5,000 a year) the great majority were living on a reduced scale, for salary cuts had been extensive, especially since 1931, and dividends were dwindling. These people were discharging servants, or cutting servants’ wages to a minimum, or in some cases “letting” a servant stay on without other compensation than board and lodging. In many pretty houses, wives who had never before—in the revealing current phrase—“done their own work” were cooking and scrubbing. Husbands were wearing the old suit longer, resigning from the golf club, deciding, perhaps, that this year the family couldn’t afford to go to the beach for the summer, paying seventy-five cents for lunch instead of a dollar at the restaurant or thirty-five instead of fifty at the lunch counter. When those who had flown high with the stock market in 1929 looked at the stock-market page of the newspapers nowadays their only consoling thought (if they still had any stock left) was that a judicious sale or two would result in such a capital loss that they need pay no income tax at all this year.
I’m sure everyone reading this just played the world’s smallest violin for this group.
When people speak of “The Economy” they do so in a way that lumps us all together in this enormous, complicated system with millions of moving parts. But that’s not the case at all.
I know plenty of people who thrived during the Great Recession. They started new businesses or received promotions. They were able to stock money away at extremely low prices in the stock market. They purchased homes at depressed prices.
I also know others who lost their job or couldn’t find one coming out of school. They bounced around from interview to interview, and temp job to temp job, taking a number of years in some cases to find something permanent. They were forced into unpleasant living experiences to make ends meet.
“The Economy” can have a huge impact on your economy because sometimes these things are completely out of our hands. It’s not always fair and some people are simply luckier than others because they were born on third base.
It’s worth remembering everyone experiences this system in a personal way depending on their circumstances.
The next recession, whenever it may be, will be no different in this respect.