The Great Depression and How It May Have Impacted Your Family
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In the 1930s, the United States experienced a long economic downturn known as the Great Depression. Countless Americans lost homes, jobs, and life savings. The Great Depression years encompassed multiple catastrophic historic events, including the stock market crash, bank failures, and drought. But it also had what were for many rays of hope, with Franklin Delano Roosevelt's election and the New Deal.
Ancestry® can help you uncover the story of your family during this time. You can learn perhaps surprising details about the challenges your family members faced and the resilience that helped them survive.
When Was the Great Depression?
The Great Depression was a worldwide phenomenon, and the timing varied between countries. But it was generally from 1929 to 1939. In the United States, the Depression started with the stock market crash in October 1929 and lasted until the spring of 1933, when real GDP began to rise an average of nine percent a year. Many of those gains were reversed when the country experienced a sharp second recession from 1937 to 1938. The American economy only truly rebounded when the U.S. mobilized for World War II in 1941.
What Caused the Great Depression?
There were many factors that caused the Great Depression, and economists still debate exactly what went wrong. But it's clear that the economy had multiple vulnerabilities that contributed to the collapse. Here are some of the major events.
Stock market crash
The 1920s were a time of great optimism. Unemployment was under five percent for much of the decade. Wages were up, and Americans had money to spend on new technologies like radios and telephones. Car ownership rose, as the cost of a Model T Ford became suddenly within reach. In fact, by 1929 there were 23 million cars on the road—up from 6.7 million in 1919.
Americans also started investing, often borrowing money to purchase stocks from new brokerage houses. Stock prices soared as borrowed money flooded the market. The Federal Reserve tried to rein in the mania by raising interest rates, but it was too late. After some fluctuations, the stock market crashed on October 24, 1929 and destroyed many families' newfound wealth. By November, stock prices had declined a whopping 33 percent.
Decline in spending
The stock market crash shook consumer confidence and slowed spending. Higher interest rates also limited what people could buy: If they had to pay more interest, they couldn't afford items like cars and homes. This reduced consumer demand and production of goods. The high-flying consumer economy inevitably contracted. Consumer spending decreased from $77.5 billion in 1929 to $45.9 billion in 1933. Real GDP fell 29 percent in that time.
After the crash, Americans generally distrusted the financial system. Many lost jobs, went bankrupt, and held dearly to every penny they had. Meanwhile banks held only some of their deposits in cash at any time, lending out the rest to borrowers. So a rush of cash withdrawals, called a banking panic, would have been disastrous. This is exactly what happened from 1930 to 1933, when a series of banking panics led to the failure of more than 9,000 banks across the country. As banks failed, people held more of their money in cash, rather than in the bank (where their deposits could be loaned out). As a result, the money supply declined by 31 percent. Banks stopped issuing loans, so people couldn't invest or make major purchases.
During the Great Depression, the United States, like many countries, was on the gold standard, meaning that the value of a dollar was based on a fixed price of gold. The Federal Reserve (also known as the Fed) and commercial banks held a portion of their reserves in gold. So when the amount of money floating around in the economy was tight, the Fed couldn't inject more funds into the economy.
Today, the Fed has the freedom to write checks and buy securities whenever it needs to increase the money supply. Under the gold standard, all of those checks would have had to be based on the amount of gold held in reserve; the U.S. would essentially have had to mine more gold to match the amount of money the Fed wanted to pump into the system. If the Fed wrote checks without adding more gold to its reserves, it would have devalued gold and shaken foreign confidence in America's commitment to the gold standard.
In the 1930s, the Great Plains experienced a severe drought. In parts of Oklahoma, Colorado, Kansas, Texas, and New Mexico, farmers had plowed prairie grasses to grow wheat, abandoning conservation practices and causing soil erosion. With few trees, the semi-arid region needed the layer of grass to protect the soil; otherwise, nothing held the soil in place. When drought hit, the land dried out and strong winds whipped up clouds of dust that covered entire homes.
Families lost their livelihoods as drought and dust destroyed their farms. And many migrated west. A reporter coined the term “Dust Bowl” to describe the drought-stricken Plains region, but it has come to symbolize the despair of the entire country.
The New Deal and the Works Progress Administration (WPA)
Herbert Hoover was president at the start of the Great Depression, and by the next election in 1932, Americans had seen conditions go from bad to worse. Many Americans have ancestors who experienced severe hardships in those years. People waited in bread lines, abandoned their farms, and lived in shantytowns known as Hoovervilles. Many Americans blamed Hoover for the Depression, and in 1932, they elected Franklin Delano Roosevelt in a landslide.
During the campaign, Roosevelt promised “a new deal for the American people." He was true to his word, initiating a flurry of reforms and programs known as the New Deal. In 1933, his administration created the Works Progress Administration (WPA) to get people back to work. Under the WPA, over 8.5 million Americans built roads, bridges, and landmarks like the Hoover Dam. If you have ancestors who were artists, the WPA might have hired them to paint murals or collect oral histories. The WPA paid low wages, but it helped alleviate the suffering of many Americans. The program wound down in 1939.
Interesting Facts About the Great Depression
The Great Depression was a profoundly difficult time that forever changed the country. Though it's hard for us to grasp today, here are a few facts that illuminate the period.
A quarter of Americans were unemployed in 1933. In March of that year, the worst month of the Depression, about 15.5 million Americans were out of work.
Women's employment rate actually rose during the Great Depression. According to census figures, two million more women were employed in 1940 than in 1930. When their husbands or fathers lost work in hard-hit industries like manufacturing, many women took clerical or retail jobs to support their families.
There were an average of 1,000 foreclosures every day in 1933. The foreclosure rate for home mortgages increased dramatically during the Great Depression, with about 13 foreclosures per 1,000 home mortgages in 1933. Farms foreclosed at a rate of 39 per 1,000.
The Great Depression led to greater financial protections for Americans. The stock market crash and bank failures led the government to regulate securities markets and create the Federal Deposit Insurance Corporation (FDIC), which protects bank deposits today.
Social Security grew out of the Great Depression. In 1935, Roosevelt signed the Social Security Act, which provided old-age insurance, unemployment insurance, and aid to families with dependent children. Ideas for these programs predated the Depression, but the economic collapse spurred action.
The New Deal funded the construction of landmarks we still use today. LaGuardia Airport in New York, the San Antonio RiverWalk, the Hoover Dam, and the San Francisco-Oakland Bay Bridge were all built with New Deal investments.
Tips for Finding Family Stories from the Great Depression
How did the Great Depression affect your ancestors? Did they lose their home, get a job with the WPA, or move west? Ancestry can help you find family stories from the Depression years.
Search 1930 Census records. Held just months after the stock market crashed, the 1930 U.S. Census can give you a snapshot of where your family stood at the start of the Great Depression. It includes employment status, monthly rent, and even if someone owned a radio.
Search 1940 Census records. Held at the end of the Depression, the 1940 Census asked people their occupation, salary, and home value. It tried to gauge the impact of the Depression: It asked if respondents had participated in WPA jobs, plus how many weeks they worked in 1939, and their earnings that year. It also listed a person's current address and where they lived in 1935. If your ancestors lived in Kansas in 1935 and California in 1940, for instance, it’s one clue that the Dust Bowl may have forced them to move.
Compare the 1930 and 1940 Census records. Straddling the Depression years, these two censuses can reveal how your family members weathered the crisis. You can compare their monthly rent or home value and employment status, and see if they moved.
Read the same headlines your ancestors did. Explore historic newspapers on Ancestry for rich insights into what life was really like during the Great Depression. Many headlines were bleak: “Stocks Dive Amid Frenzy"; “Dust Turns Day into Night, Closes Schools, Blocks Roads"; “Homeless Floaters Erect Shanty-Town on River Bank." But others showed signs of resilience and optimism: “Haven of Hope for Homeless Farm Families: Co-operative Project Makes Favorable Progress."
Browse images of the Great Depression. Search the Library of Congress Photo Collection on Ancestry to get a sense of what life was like. Photos of abandoned farms, sharecroppers, or Hoovervilles show what your ancestors may have experienced.
Explore your family's Great Depression story
Curious about what life was like for your ancestors during the Great Depression? Explore your family stories from before and after the Great Depression through census records, on Ancestry® today.
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