Timeline of the Great Depression
Mounting losses from further stock market declines and a worsening macro-economy would further strain the banking system.
Over $34 million in wealth would be lost from the collapses in leverage investment products in 1929 offered by Goldman Sachs alone.
An increasing number of bank failures in late-1930 interrupted the process of credit creation and reduced the money supply, harming consumption.
[3] A true understanding of the Great Depression requires not only knowledge of the U.S. monetary system but also the implications of the gold standard on its participatory nations.
[4] This article focuses on the economic milestones, with some mention of the political and social impact of the depression on nations and classes in a global context.
The combined net profits of 536 manufacturing and trading companies showed a 36.6% increase over the same period in 1928, with steel production leading the way.
However, the mini-crash was averted two days later when National City Bank pumped $25 million in credit into the stock market.
The Federal Reserve continues with its plan to raise interest rates from 4% in mid-1928 to 6% by mid-1929 in an attempt to combat speculative behavior.
June 15: the Agricultural Marketing Act of 1929 is signed into law, providing some $100 million in emergency loans to struggling farmers.
Steel production and automobile & house sales notably decline, construction stagnates, and consumer debt was reaching dangerous levels on account of easy credit.
Over $8.5 billion of margin loans for stocks were outstanding, worth more than all currency circulating in the United States at the time.
September 20: The London Stock Exchange crashes after the collapse of Hatry Group on charges of fraud and forgery.
October 30: one day recovery November 1: The Federal Reserve begins lowering the discount rate from its 6% level.
June 17: Smoot-Hawley Tariff Act passed, placing more stress on the weakening global economy, primarily through the collapse in trade of agricultural products, which strained banks that had lent heavily to farmers.
Further decreases in trade of manufactured products led to layoffs and reduced corporate profits, weakening the economy.
General consensus among economists is that the Smoot-Hawley Act did not cause the Depression, but did worsen it and stunted recovery efforts after 1933.
September 14: The 1930 German federal election is held, with strong gains for the Nazis, who become the second-largest party in the Reichstag, and the Communists.
May–June: Second major round of U.S. bank failures and worsening economic situation contributes to permanent change in people's expectation of the economy.
The deflationary spiral that began earlier in the year rapidly and severely intensifies June–July: German banking crisis.
September – October: Substantial amount of dollar assets (primarily Federal Reserve Notes) are converted to gold in the US by European central banks seeking to cover losses from the panic that had been sweeping Europe since the collapse of CreditAnstalt.
As deflation intensified, real interest rates were magnified and rewarded those who held onto money, thus contributing to the deflationary spiral.
April – June: Federal Reserve conducts open market transactions, increasing the money supply by $1 billion.
Summer 1932: Majority of foreign trade restrictions take effect, from Smoot-Hawley in the United States and Imperial Preference in the British Empire.
July 8: The Dow Jones Industrial Index bottoms out at 41.22, the lowest level recorded in the 20th century and representing an 89% loss from its peak in September 1929.
A minor setback for the Nazi Party, a campaign of mass violence and intimidation would begin in the run up to the next election in March 1933.
[11] These new deposits saved cash-starved banks and helped restart the money creation process after years of credit contraction.
March 20 – The controversial Economy Act of 1933 is signed into law, slashing $243 million in government salaries and pensions, and veterans' benefits.
Despite the economic crisis, supermajorities of American economists, policymakers, and the general public believed that the federal government needed to balance the budget and avoid deficit spending, to avoid putting further strain on the bond market which would negatively affect government borrowing costs, banks, corporations, and foreign investors.
The U.S. Securities and Exchange Commission was established the following year, which helped combat insider trading and reducing transaction risk.
The end of Prohibition hurts organized crime, allows legal employment in alcoholic drink production, and increases state tax revenues.
