LYCOS RETRIEVER 
The Great Depression: Economies
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The Great Depression is the greatest case of self-inflicted economic catastrophe in the twentieth century. as capable as before of affording for every one a high standard of life.... restore [raise] prices and profits, so that in due course the wheels of the world's commerce would go round again."
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The Great Depression followed almost a decade of spectacular economic growth. Between 1921 and 1929, output per worker grew about 5.9 percent per year, roughly double the average in the twentieth century. Unemployment and inflation were both very low throughout this period as well. One troublesome characteristic of the 1920s... was that income distribution became significantly less equal. Also, a boom in housing construction, associated in part with an automobile-induced rush to the suburbs, collapsed in the late 1920s. And automakers themselves worried throughout the late 1920s that they had saturated their market fighting for market share; auto sales began to slide in the spring of 1929.
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The Great Depression was by far the most devastating economic slump in U.S. history, one whose crippling influence was felt by industrialized nations around the world. The concept of an economic depression was not new to the modern world... the severity of the economic crisis initiated by the Stock Market Crash of 1929, led to numerous problems on levels previously unknown. It was almost as if someone had knocked over a series of dominos. The failure of many banks led to a general and nationwide loss of confidence in the economy, which in turn led to much-reduced levels of spending and demand, which consequently led to a drop in production, thus further aggravating this vicious cycle. By 1932, U.S. manufacturing output had fallen to 54 percent of its 1929 level, and unemployment had risen to between 12 and 15 million workers, or 25-30 percent of the work force.
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The NBER business cycle chronology dates the start of the Great Depression in August 1929. For this reason many have said that the Depression started on Main Street and not Wall Street. Be that as it may, the stock market plummeted in October of 1929. The bursting of the speculative bubble had been achieved and the economy was now headed in an ominous direction. The Federal Reserve’s seasonally adjusted index of industrial production stood at 114 (1935–39 = 100) in August 1929. By October it had fallen to 110 for a decline of 3.5 percent (annualized percentage decline = 14.7 percent).
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The period that is called the Great Depression contained two periods of recession. The first began in August of 1929 (two months before the stock market crash) and ended in March of 1933. (These dates have been chosen by the National Bureau of Economic Research, a nonprofit organization that sponsors a great deal of economic research. They are based on the analysis of a large number of economic time series, and do contain some subjective elements.) In the first recession the value of goods and services that the economy produced fell by about 42% (but only by 36% once the effects of price changes are eliminated). The recovery in the four years that followed was slow and not completed by the time the second recession began. In this recession lasting 13 months from May 1937 until June 1938, output fell by 9% (but only 6% when the effects of changes of prices are eliminated).1
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Great Britain ... attempted to insulate itself from the rest of Europe and the U.S. by drawing on its economic ties with its empire and the commonwealth. Needing to import two-thirds of its food, Britain went to extraordinary lengths to maintain its exports and to keep the costs of manufacturing low, including wages. This meant belt tightening for the public. And in trying to keep inflation down, Britain tried to keep spending down, which meant little or no public works projects and little of the deficit spending that was tried in Sweden. But Britain did maintain its unemployment insurance, Labour resisting pressure from conservatives for cuts in unemployment benefits. The overall result kept Britain's economy from falling as far as did the U.S. and German economies.
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