This Business of Relief
THE STOCK MARKET collapse on October 24, 1929, signaled the end of the prosperous 1920s and the beginning of ten years of economic depression. Contemporaries failed to see the crash as a sign of what was to come. The most recent downturn in the economy, a deflation following World War I, had been over in eighteen months. The most recent major depression had occurred before the turn of the century, beginning in 1893 and lasting four years.
As early as 1927, the economy showed some signs of weakness. Home construction, automobile production, purchase of consumers' durable goods, and new investment in producers' durable goods all declined. In the summer of 1929 a little noticed, but serious, downturn set in. The Federal Reserve index of industrial production peaked at 126 in June, falling to 117 by October. By September-October, a recession was already under way. By the end of the year, all aspects of American business and finance were on the skids.
At its lowest point, in 1933, the gross national product (GNP) stood at $56 billion, just about half its value in 1929. Not until 1937 did the GNP reach $95 billion, only to drop sharply in the recession of that year. The Depression years saw industrial production fall by almost one-half,