For many people the prosperity of the 1920s ended, symbolically at least, with the stock market crash of October 1929. Just fourteen months earlier Herbert Hoover, accepting his party's nomination for the presidency of the United States, had declared, "We in America today are nearer to the final triumph over poverty than ever before in the history of any land." He won, carried to victory on the promise to apply business management skills and engineering efficiency to government and to put "a chicken in every pot and two cars in every garage." (Robert F. Himmelberg, 2001).
When he was voted out of office just four years later, shantytowns known as Hoovervilles dotted the countryside; Chicago, the manufacturing center of the United States, had some seven hundred thousand unemployed, or about 40 percent of those who reported gainful occupations. The U. S. Army, with bayonets fixed, sabers drawn, and supported by tanks, had dispersed the so-called Bonus Army of unemployed veterans from World War I who had gathered on Anacostia Flats just outside Washington, D.C., to petition the government peacefully for redress of their grievances. Clearly something had gone dreadfully wrong. Nor was normalcy quickly restored. Indeed, it was a decade before some economic indicators had returned to the levels they had achieved in 1929. This period quickly displaced the 1890s in American historiography as the Great Depression—a time still vividly remembered by many of our parents and certainly by our grandparents. Its legacy is enshrined in so many of our political, economic, and social institutions and thought.
Between 1929 and 1933 real output fell by 29 percent. It then took five years to inch back to predepression levels. Gross investment fell from about 15 percent of GNP—approximately the long-run historical average—to less than 1 percent in 1932 and 1933 and remained below the long-term trend until World War II rearmament..............
