What ended the Great Depression.

[Honeycombe8]

I was looking up some facts about unemployment in 1928 and 1929 before the stock market crash, when I ran across this brief statement about what ended the Great Depression. I thought it was interesting about how long it took to end it, so thought I'd post for those who didn't know (like me):

***********************
What Ended the Great Depression of 1929?:
In 1932, Franklin Delano Roosevelt was elected President based on his promises to create Federal Government programs to end the Great Depression. Within 100 days the “New Deal” was signed into law. This created 42 new agencies designed to create jobs, allow unionization, and provide unemployment insurance. Many of these programs, such as Social Security, the SEC (Securities and Exchange Commission), and FDIC (Federal Deposit Insurance Corporation) are still here today, helping to safeguard the economy.
However, the extent of the Great Depression was so great that government programs alone could not end it. Unemployment remained in the double-digits until 1941, when the U.S. entry into World War II created defense-related jobs.

*************************

Wow. The Great Depression reached its height, it seems in 1932, and unemployment didn't get better for almost 10 years. Makes me think that it DOES take some time for things to work. When things get that bad, they don't get better overnight. Imagine all the suffering...there was no Social Security for the elderly, no unions for middle class wages, wages had sunk to almost half of what they had been, and double digit unemployment without any unemployment insurance. (Thre reason for the FDIC, I read, was that because of all the banks closing - hundreds of them had closed - people were withdrawing their money from banks altogether and putting it in mattresses and so forth. Their savings had been lost, if their bank had closed.)

[FarLeftFist]

1. 2 1/2 years is WAAAY to long to wave a magic wand!

And just like it takes time for progress to happen is the same reason we're still in a Bush economy.

[HockeyMom]

2. According to my parents and Grandma

WW2, which we don't have those kinds of wars anymore, and FDR and the CCC and WPA. Can't do that any more either.

[earthside]

8. And the cost was too high.

WWII did end the Great Depression ... but that was not a good thing.

The loss of lives and treasure was enormous -- that war was one of the greatest tragedies in all human history.

Or course, Naziism had to be stopped, but if the United States had joined the League of Nations, Hitler and the re-militarization of Germany might have been avoided in the first place.

War is a terrible way to solve economic problems, if indeed it ever does solve them at all.

[JuniperLea]

12. War and killing didn't do it...

The stimulus of the money we spent ended the depression.

[Honeycombe8]

11. The reason the Iraq & Afghanistan wars didn't help, I think, is because of manufacturing....

America doesn't do a lot of manufacturing, anymore. Rosie the Riveter and so forth in WWII.

They were also smaller in territory, and the type of equipment used became more efficient...no longer needed as many tanks and such.

[eridani]

32. And also because quite a bit of the money was pissed away on private contractors n/t

[jmowreader]

39. We still manufacture military hardware

The reason manufacturing worked in WWII and did NOT work in the Bush wars is twofold.

First, we had a very small stockpile of equipment after World War I. What we had in the First War was used up in that war, and we weren't able to replace it. When the Bush wars kicked off, we had the benefit of Reagan's bankrupting the country to equip us to fight World War III: plenty of very good quality military equipment was ready to go.

And more importantly, there wasn't really a Defense Industry until after World War II. Most of the materiel used to fight WWII was made by companies that didn't make military equipment before the war. Ford made airplanes, Cadillac and Chrysler made tanks, IBM made guns...today, if you work for a company that makes military equipment, there's a very good chance they don't make anything else.

So! We didn't have to manufacture very much materiel (besides consumables like ammo, fuel, Humvees and field rations) to fight the Bush wars, and those things were made in a very small, isolated sector of the economy.

[rug]

3. WW2

[banned from Kos]

4. you answered your own question -- WW2 in 1941 ended it

The Fed made everything worse then by raising the Fed Funds rate to 5% in 1932.

Today is a 1/4 of 1%.

[The_Casual_Observer]

5. And it took defense-related jobs & drafting men & women

into the military to end it. The notion that the free market will fix this is entirely bogus.

[Honeycombe8]

15. None of what I posted said anything about the "free market" fixing it. It was FDR's new deal...

AND WWII (because America did manufacturing).

Seems to me that much of FDR's new deal did was to decrease suffering, and put a cap on unemployment. It didn't continue to rise, and it lowered a bit. Because of unemployment insurance and unions being formed that bargained for increased wages, it helped spur the economy.

That's the way I read it.

WWII alone wouldn't have been enough, and the suffering would have been much greated without the New Deal.

[FarLeftFist]

6. WPA

[KamaAina]

7. That's what scares me.

WWIII would sure as hell get us out of the Lesser Depression -- but not for long. :nuke:

[Honeycombe8]

16. No, well, we have a nuclear button, now. yikes. Besides, we don't manufacture

much, anymore. That's done in India or China or wherever.

[JuniperLea]

9. WWII was NOT the reason...

It was the STIMULUS of the money the US spent on that war that brought us out of The Great Depression... killing people didn't do it, but when you say WWII did it, that's what it sounds like.

Why can't we just spend money on good things for we the people? Take the amount that was spent on WWII and bring it up to what it would cost today, then spend that money on things we need... like roads and bridges and schools... you know, the stuff we need?

Because we are only motivated to spend that kind of money on death! Why can't we be motivated to spend it on LIFE??

[roamer65]

10. World War II spending.

....and they will use World War III to try to solve these economic issues.

[DJ13]

13. I know the common wisdom is WWII ended it, but it was actually the spending

All the money funneled into the economy to build the war machine was the real stimulus.

If the government was serious about actually improving our economy that kind of stimulus could be done without war.

[Honeycombe8]

25. Well, that's what people mean when they say WWII ended it. They mean it was

all the spending that goes along with a global war...for equipment, uniforms, weapons, contracting for services.

I'll betcha there were no no-bid contracts with Halliburton in WWII.

[Pyrzqxgl]

14. This time we've already got the defense related jobs

[Honeycombe8]

19. This time....we don't build the tanks and such. America is no longer the steel capital

of the world a la Rosie the Riveter.

Or the Iraq and Afghanistan wars would've helped more.

[ChandlerJr]

17. According to Nobel Prize Winning Paul Krugman

What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs.

http://www.nytimes.com/2008/11/10/opinion/10krugman.html

17.5 million people in the military put a real dent in that unemployment number.

[Honeycombe8]

21. Don't forget all the people employed in America. Rosie the Riveter.

That was a HUGE worldwide Great Depression.

The recession we're in now is much smaller. Still, it would've taken a larger stimulus bill the last time, I guess. That chance has passed, though. We've only got the future.

[treestar]

33. That raises the issue of why haven't the wars in Iraq

and Afghanistan done the same.

And we went into debt for WWII also. We go into debt with every war.

Could it have been the baby boom and all the housing and consumption that promoted.

[ChandlerJr]

35. 2 main items

1:During WW2 the United states had 17.5 million people in the military out of a population of about 140 million. Today the entire military is around 1.5 mill out of our greater than 300 million.

2: The entire country was on a war footing. The iron mines in Mn were pumping out ore, the mills in Pittsburgh were producing steel by the 1000s of tons and Detroit was making tanks, jeeps, aircraft and the shipyards all over were building Liberty Ships.

No automobiles and civilian trucks got produced, tires and gas were rationed for the war effort, hell even Harley Davidson made motorcycles for the military.

Krugman calls it the greatest public works project in history. Nothing today compares.

[Honeycombe8]

38. The baby boom was after the war and recovery. Our recession is..

what, less than half as bad as the Great Depression? So it'd take what - 5 years? - to recover? 2 1/2 have passed.

America no longer has a large manufacturing base.
Our wars are more streamlined and techie...we don't need as many boots on teh ground & as much equipment.

I guess we always do go into debt for war...but in WWII, the country sold bonds to pay for the war, and raised taxes. Bush not doing that probably contributed to the recession...the trillions we've spent on those wars that were not funded in any way.

[sam11111]

18. Gov programs alone COULD have ended the GD. OP quote and i disagree. I say Gov programs could have

ended the GD without WW2. If they had been larger.

NOTE:WW2 was a gov spending program.

Also if FDR had ramped WPA up to END all joblessness that would have done it.

He mistakenly cut WPA about 1937 , feeling unsure about Keynesianism and the GD roared back.

[leftstreet]

22. If the US would $pend as much on the War on Poverty as it did on WWII

it'd be a great start

[Honeycombe8]

23. Unemployment rates for 1932 - 1946

Here are the unemployment rates I found on the internet:

1932 23.6
1934 21.7
1936 16.9
1938 19.0
1940 14.6
1942 4.7%
1944 1.2
1946 3.9

Read more: United States Unemployment Rate 1920–2008 — Infoplease.com http://www.infoplease.com/ipa/A0104719.html#ixzz1YA3ouSw9

Looks like you're right about the unemployment increasing quite a bit after 1936. Interesting. Thanks for that info.

[ThomWV]

20. Franklin Delano Roosevelt ended the Great Depression, He was a Democrat who acted like a Democrat.

[Honeycombe8]

24. Yeah. They broke the mold on people like him, I think. What a man. nt

[treestar]

34. All by himself? Don't think so.

And it took more than 8 years.

And had ups and downs in those years.

This reeks of looking for a Savior.

[malaise]

26. Well it took Bush a decade

to fugg up the planet so it will take another decade to destroy his madness

[whosinpower]

27. FDR did something else - huge

The Gold Reserve Act - 1934

[Gman]

28. There are a great many parallels between the Great Depression and

the Great Recession.

[unblock]

29. it was the massive keynesian stimulus of federal spending prompted by wwii.

as much as republicans complain about how massive fdr's spending was, the reality is that the economic success of wwii proved that fdr didn't go nearly far enough.

economically, war produces almost nothing of value; in fact it actively destroys value. you may get some technological advances as a result of the war and of course after the war some of the war materiel can get converted to productive use, but for the most part, wars are about destroying economic value rather than adding to it.

yet the massive spending involved does wonders for an economy because it puts people to work, which gets people to buy, which gets money circulating, and for the most part the economy grows like gangbusters.

just imagine if, in 1933 (or 2011, for that matter) there were actually the political will and audacity to spend at wwii levels -- we're talking the federal government spending at a level of over 100% of gdp for a few years -- but on growing the economy in a better direction; not for war, but to improve our education, infrastructre, green technology, and so on.

that would get the economy moving like gangbusters, and after a few years of that, the government could easily pay down the debts incurred through reasonable taxation that everyone would be fine with because the economy would be strong, just as it was after wwii.


sadly, war is pretty much the ONLY thing that will actually prompt humankind to dare part with so much money, even though it comes back many times over.

[misanthrope]

30. In a way, it was socialism that saved us...

...New Deal aside, the effect of WWII was multi-fold. Millions of Americans went to work directly for the government in the armed services. Government didn't directly seize the means of production but government contracts turned gears, moved assembly lines and trucks and put folks to work. Americans left stateside bought bonds and more willingly adhered to austerity measures because they felt a stake in the sacrifice.

Any time a right winger tells you WWII turned the economy around, what they're telling you is that government spending, employment and contracts are what did it...and most of them don't even realize what they are saying.

[eridani]

31. That it took that long reflected that the government wasn't spending enough money

In 1942, WW II provided the excuse for the massive spending that ended the depression. The takehome message is that massive spending is the only thing that works. Why must we wait for that kind of disaster to spend the money that we know will do the trick?

[DrunkenBoat]

36. WW2 spending. But *we're* already in FIVE wars & it's not helping.

[Honeycombe8]

37. We're just in two...Afgh. & Iraq. And they're small. And America doesn't manufacture...

anymore, not to the extent that it used to. We seem to assemble a lot of things, but not manufacture many things.

What's been done so far HAS helped, IMO. We were on the brink of a great depression, according to some. Then it stopped right there. Jobs increased, then jobs were lost, then jobs increased, then jobs were lost. Sounds similar to the other recovery. Except our situation is less than half as bad as the Great Depression, so maybe....five years to recover? 2 1/2 years have passed. 2 1/2 more to go?

[DrunkenBoat]

40. We're in 5 wars. You just don't hear about them on TV. The US is the world's top manufacturer.

http://seekingalpha.com/article/246484-the-u-s-is-still-the-world-s-top-manufacturer

[David Sky]

42. What percentage of the US population is actively engaged in your "5" wars?

What percentage of the US population was actively engaged in, or manufacturing goods, or buying "war bonds" to finance WW II?

What part of the American print and radio media was reporting daily upon that ONE war as the major topic?

See the difference?

[DrunkenBoat]

43. As in manufacturing, the percentage of population engaged is irrelevant.

As is the reportage.

What *is* relevant is the spending. The spending is what impacts "the economy". War spending consumes about the same fraction of national income as it did during the cold war.

The reduced fraction of the population engaged is a function of increased efficiency & productivity in extraction & manufacturing. The same reason there are fewer jobs in manufacturing generally (all over the world, not just in the US, and the reason that war spending doesn't have as big a "multiplier effect" in jobs as it once did, even though the US now has more military installations all over the world & is engaged in more military actions than ever.






China is losing more manufacturing jobs than the United States. For the entire economy between 1995 and 2002, China lost 15 million manufacturing jobs compared with 2 million in the United States, according to The Conference Board.

"As its manufacturing productivity accelerates, China is losing jobs in manufacturing--many more than the United States is--and gaining them in services, a pattern that has been playing out in the developed world for many years," asserts The Conference Board report.

http://www.allbusiness.com/marketing/market-research/211443-1.html

Source: http://www.allbusiness.com/marketing/market-research/211443-1.html#ixzz1YDYMe01U

The lack of overt mechanisms for financing war ("war bonds") is a function of increased efficiency in extracting the capital via other means and the increased fraction of surplus capital held at the top of the income distribution.

Both indicative of an increased percent of the value of national surplus production going to the hands of capital rather than labor.

The reduction in reportage is a function of the reduction of reportage on serious issues generally, which serves the interest of a system increasingly dominated by capital in mystifying the true state of affairs. "The masses" are increasingly irrelevant to the system -- not needed as labor, not needed as consumers, input not desired as citizens.

It's not 1940 anymore; you shouldn't expect war to be conducted as it was in 1940 -- or even 1970.

[DCBob]

41. In some ways things are even worse now. The Great Depression was a recoverable situation..

The Great Recession may not be. Actually it probably should be termed the Great Correction. There are serious fundamental issues that will hinder us from ever getting back to our peak... primarily being globalization. The rest of world, especially Asia, is catching up to us. In some ways that is a good and fair thing to happen but the transition is killing us. I think in time this will work out and America will regain much of economic power but it wont be anytime soon.

[jtuck004]

44. It does take some time to end it - but that only starts when people recognize the depth

of the problem, quit making excuses.

The pathetic little programs, which we are told is all that can be done, stand as proof that we haven't even started yet. They are shiny keys, meant to distract us from the fact that we are not propping people up, (note the numbers of people with not enough food, no health insurance, whose homes are being foreclosed on are INCREASING every single day). We are insuring payments to a debt machine that has grown too large, on the theory that if we keep the banks and the wealthy intact, everyone else will benefit, a wrong-headed theory that began to erode our thinking over thirty years ago, and one that insures this malaise will continue for at least another 10 years.

We haven't even started to fight back yet.