This page features two timelines: the first for general events of the Roaring 20s and the Great Depression, the second for leading economic indicators.

The importance of these timelines cannot be emphasized enough. Seeing the order in which events actually occurred dispels many myths about the Great Depression. One of the greatest of these myths is that government intervention was responsible for its onset. Truly massive intervention began only under the presidency of Franklin Roosevelt in 1933, who was sworn in after the worst had already hit. Although his New Deal did not cure it, all the leading economic indicators improved on his watch.

But don't take my word for it -- here is the raw data:


1920s (Decade)

1922 1923 1924 1925 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1945 ECONOMIC TIMELINE

The following timeline shows the order of economic events during the Great Depression. Notice the effect that deficit spending had on economic growth:

Receipts: Tax receipts as a percentage of the Gross Domestic Product

Spending: Federal spending as a percentage of the Gross Domestic Product

GNP: Percent change in the Gross National Product

Unemp.: Unemployment rate

       Tax       Federal    GNP       Unemp.
Year   Receipts  Spending   Growth    Rate
1929      --       --         --      3.2%  < Hoover era, Great Depression begins
1930     4.2%     3.4%     - 9.4%     8.7
1931     3.7      4.3      - 8.5     15.9
1932     2.9      7.0      -13.4     23.6
1933     3.5      8.1      - 2.1     24.9   < FDR, New Deal begins; contraction ends March
1934     4.9     10.8      + 7.7     21.7
1935     5.3      9.3      + 8.1     20.1
1936     5.1     10.6      +14.1     16.9
1937     6.2      8.7      + 5.0     14.3   < recession begins, May
1938     7.7      7.8      - 4.5     19.0   < recession ends, June
1939     7.2     10.4      + 7.9     17.2
1940     6.9      9.9  
1941     7.7     12.1  
1942    10.3     24.8   
1943    13.7     44.8   
1944    21.7     45.3   
1945    21.3     43.7

As you can see, Roosevelt began relatively modest deficit spending that arrested the slide of the economy and resulted in some astonishing growth numbers. (Roosevelt's average growth of 5.2 percent during the Great Depression is even higher than Reagan's 3.7 percent growth during his so-called "Seven Fat Years!") When 1936 saw a phenomenal record of 14 percent growth, Roosevelt eased back on the deficit spending, overly worried about balancing the budget. But this only caused the economy to slip back into a recession, as the above chart shows.

I have been unable to find reliable economic growth figures from World War II, but as a generalization it is safe to say the economy exploded, experiencing it’s greatest growth in U.S. history. Between 1940 and 1945, the GDP nearly doubled in size, from $832 billion to $1,559 billion in constant 87 dollars. And this occurred as deficit spending soared, to levels Keynes had earlier and unsuccessfully recommended to Roosevelt.

Next Section: Summary
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T.H. Watkins, The Great Depression: America in the 1930s (New York: Little, Brown and Company, 1993)

Kevin Phillips, Boiling Point (New York: HarperCollins, 1993)

Kevin Phillips, The Politics of Rich and Poor (New York: Random House, 1990)

The 1995 Grolier Encyclopedia (Entries: New Deal, Depression of the 30s, Roosevelt, Coolidge.)

The Encyclopedia Brittanica Online (Entries: New Deal, Great Depression.)

Donald Barlett and James Steele, America: What Went Wrong? (Kansas City: Andrews and McMeel, 1992)

Donald Barlett and James Steele, America: Who Really Pays the Taxes? (New York: Simon & Schuster, 1994)

James MacGregor Fox, Roosevelt: The Lion and the Fox (New York: Konecky and Konecky, 1956)

Elaine Schwartz, Econ 101½ (New York: Avon Books, 1995)

Peter Pugh and Chris Garratt, Introducing Keynes (Cambridge, England: Icon Books, Ltd., 1993)

Paul Krugman, Peddling Prosperity (New York: W.W. Norton and Company, 1994)

Online sources:

History lecture notes: http://www.marshall.edu/history/mccarthy/hst331/lecture/greatdep.1

Gary H. Stern (President, Federal Reserve Bank of Minneapolis), "Achieving Economic Stability: Lessons From the Crash of 1929," 1987 Annual Report Essay, http://woodrow.mpls.frb.fed.us/pubs/ar/ar1987.html

Office of Management and Budget, Budget of the United States Government, Fiscal Year 1997, Historical Tables 1.2 and 10.1, http://www.doc.gov/BudgetFY97/histtoc.html