The Depression in the United States--An
Overview
The Great Depression
In October 1929 the stock market crashed, wiping out 40 percent of the paper values of common
stock. Even after the stock market collapse, however, politicians and industry leaders continued to
issue optimistic predictions for the nation's economy. But the Depression deepened, confidence
evaporated and many lost their life savings. By 1933 the value of stock on the New York Stock
Exchange was less than a fifth of what it had been at its peak in 1929. Business houses closed their
doors, factories shut down and banks failed. Farm income fell some 50 percent. By 1932
approximately one out of every four Americans was unemployed.
The core of the problem was the immense disparity between the country's productive capacity and
the ability of people to consume. Great innovations in productive techniques during and after the war
raised the output of industry beyond the purchasing capacity of U.S. farmers and wage earners. The
savings of the wealthy and middle class, increasing far beyond the possibilities of sound investment,
had been drawn into frantic speculation in stocks or real estate. The stock market collapse, therefore,
had been merely the first of several detonations in which a flimsy structure of speculation had been
leveled to the ground.
The presidential campaign of 1932 was chiefly a debate over the causes and possible remedies of the
Great Depression. Herbert Hoover, unlucky in entering The White House only eight months before
the stock market crash, had struggled tirelessly, but ineffectively, to set the wheels of industry in
motion again. His Democratic opponent, Franklin D. Roosevelt, already popular as the governor of
New York during the developing crisis, argued that the Depression stemmed from the U.S. economy's
underlying flaws, which had been aggravated by Republican policies during the 1920s. President
Hoover replied that the economy was fundamentally sound, but had been shaken by the
repercussions of a