Federal Reserve Policy in the Great Depression

Abstract

Students of U.S. economic history agree that Americans living during 1929 to 1933 experienced the biggest economic catastrophe in the history of the nation. The terror visited upon families by the disaster cannot be expressed in numbers. However, an impression of the severity of the Great Depression can be gained by examining a handful of pertinent facts. From the fall of 1929 to the spring of 1933, the nation’s nominal gross domestic product (GDP) fell nearly 50 percent. Real GDP declined by 29 percent and industrial production fell in half. This relative decline in real GDP was more than six times the magnitude of the contraction experienced during the Great Recession of 2007–2009, the most severe U.S. downturn since the Great Depression. Table 10–1 indicates some of the salient indicators of macro-economic conditions in the United States from 1928 to 1938.