Timeline of the Great Depression: Its Causes and How It Ended

Updated 4/28/2023

“History doesn’t repeat itself, but it often rhymes.”

Mark Twain

The Great Depression is one of the world’s greatest catastrophes, with repercussions that have echoed. Many are familiar with the term and know it is “bad.” But most are not familiar with the origins and the timeline of the Great Depression and how truly awful the impact was.

In today’s world, we have recently experienced a few economic shocks, with the Great Financial Crisis, now called, and more recently, the Covid-induced economic slowdown.

But the Great Depression changed how we viewed the world and how financial decisions impacted the entire planet. Its influence on future generations is still with us today, as evidenced by the rise of Bitcoin and other means to balance the economy.

My goals with this post are to highlight timelines to observe events unfold and illustrate some effects to see any correlations to today’s events.

Thousands of books focus on the different aspects of the Great Depression, and it is a subject as deep and wide as the study of the Civil War. And if it interests you, there are many great resources to learn more about this fascinating subject.

The best way to avoid future calamities is to study history and past events to learn from our mistakes.

In today’s post, we will learn:

Ok, let’s dive in and learn more about the timeline of the Great Depression.

What Are the Main Events of the Great Depression?

The Great Depression began in 1929 and extended until 1941, depending on which resource you read. Many feel that the Depression ended in 1938, but unemployment remained high, 10%, until 1941, even with the economy beginning to expand in 1938.

Once the U.S. entered World War II in 1941, the Great Depression became an object in the rearview mirror.

Look at some of the years during this time and highlight bigger events.



In 1929 Herbert Hoover became president, and his relaxed economic policies did little to restrain the coming Depression. Hoover was a product of the “roaring 20s,” which saw great economic expansion, and his idea was to stay out of the way.

In August of that year, the economic expansion of 1929 ended and began to contract, which is the time that most associate with the beginning of the Great Depression.

At the time, the U.S. was still on the gold reserve, which was the basis of monetary policy; the gold reserve backed all funds.

October 24, Black Thursday, is considered the beginning of the Great Depression, which, while bad, was not the real beginning.

On Black Friday, the market fell 11%, with Wall Street bankers buying stocks all day, which reduced the day’s loss to 2%.

From October 28 to November 23, the market fell to the bottom, losing 25% in the first two days of the crash, which remains among the worst two-day losses in history.

In 1929, 650 banks failed, reducing the money supply and making less credit available, increasing the dollar’s value. There were fewer of them available, which caused the prices of goods to fall, reducing businesses’ revenue.

At this time, unemployment remained low, at 3.2%, because unemployment tends to lag economic events.


The beginning of the drought triggered the start of the Dust Bowl drought, which was the worst in 300 years. As crops failed, farmers couldn’t produce enough food to eat.

November 7 saw the failure of the Bank of Tennessee, which triggered affiliate closures. At this time, the banking system was not as organized as today, and only one-third of the banks were a part of the Federal Reserve banking system.

All the bank failures sparked a run on banks, and banks only holding reserves of 10% in deposits caused the banks to fail. By the end of 1930, over 1,300 banks were closed.

On December 11, the Bank of the United States failed, the fourth-largest bank in the U.S. As a result, Hoover raised income taxes, and the economy continued to shrink to 8.5%. Likewise, unemployment fell to 8.7%, and deflation began as prices fell to 6.4%.


Another bad year as the economy continued shrinking an additional 6.4% while unemployment rose to 15.9%. Plus, prices fell an additional 9.3% as people began to suffer the worst of the Great Depression.


The economy bottomed out after shrinking 27% from its 1929 highs. The Dow bottomed out at 41.22, a 90% slide since the September 1929 highs.

Fourteen dust storms slammed the Midwest, with the economy shrinking to 12.9%, unemployment rising to 23.6%, and prices falling to 10.3%.


Franklin D. Roosevelt became president, signed into effect the New Deal, and ended Prohibition in March.

On April 19, Roosevelt temporarily abandoned the gold standard, ordering all private ownership of gold bars to exchange them for dollars.

FDIC insurance began in June, which insured Fed banks’ deposits, resulting from the Glass-Steagal Act.

48 Dust storms ravaged Oklahoma and the surrounding region, the economy shrank 1.3%, unemployment rose to 24.9%, prices rose 0.8%, and the national debt rose to $23 billion.


The year they produced the hottest temperatures on record, with temperatures topping 100 degrees for 29 consecutive days.

By the end of 1934, droughts covered 75% of the U.S. and 27 states.

The good news, the economy grew 10.8% because of the New Deal programs, unemployment fell 21.7%, and prices rose 1.5%.


FDR instituted more social programs to help the country. As a result, the economy grew 8.9%, unemployment fell 20.9%, and prices rose 3%.


The country’s temperatures continued to escalate, with 20 states experiencing 110 degrees or higher and four higher than 120 degrees.

A morbid fact, at least 1,693 people died from the heatwave, and an additional 3,500 died from drowning while attempting to cool off.

The economy rose 12.9% during the year, unemployment fell 16.9%, prices rose 1.4%, and the government debt grew to $34 billion.


FDR began his second term with more social programs to help the country get back on its feet. He also reduced federal spending to cut back on the growing national debt.

The U.S. established the first minimum wage at $0.25 an hour, overtime pay, and youth employment standards during the year.

Despite all the efforts, the economy started contracting once again.

The economy grew at 5.1%, unemployment fell to 14.3%, prices climbed 2.9%, and the Federal debt grew to $37 billion.


The Great Depression was over, with the economy starting to grow again. But the economy did shrink for the year at 3.3%, unemployment rose 19%, and prices dropped 2.8%. At the same time, the Federal debt kept stable at $37 billion.


Even though the Great Depression was over, everything was not all roses. The drought returned, with Louisiana experiencing record temperatures.

World War II began with Hitler invading Poland.

FDR convinced Congress to repeal the ban on shipping arms to France and Britain.

The economy grew 8%, unemployment fell 14.6%, prices grew slightly at 0.7%, and the Federal debt grew sharply to $51 billion.


FDR began his third term, and tempers flared as the U.S. sank a German submarine in 1940, and the U.S. continued shipping supplies to Britain.

At the end of 1941, on December 7, Japan attacked the U.S. at Pearl Harbor, finally drawing the U.S. into the war.

During the two years, the economy grew to 17.7%, unemployment dropped to 9.9%, prices grew to 9.9%, and the U.S. debt grew to $58 billion.

As a side note, FDR grew the U.S. debt percentage the most of any president.


Twenty-five years later, on November 23, the Dow reached 382.72, exceeding 381.7 for the first time since the record high set in 1929.

Causes of the Great Depression

According to one of the foremost experts on the Great Depression, Ben Bernanke, the central bank helped create and spur the Great Depression.

great depression

Bernanke, a former chairman of the Federal Reserve, wrote a fantastic book compiling many great resources and essays concerning the Great Depression.

According to Bernanke, the central bank tightened monetary policies before and during the Great Depression when they should have done the opposite.

In his book, Bernanke outlines five critical mistakes; let’s take a look at those:

  1. The Fed started raising the Fed Funds rate in 1928 and continued increasing it through the recession that started in 1929.
  2. When the stock market plunged in 1929, investors turned to currency markets as a place of safety. During this time, the U.S. was on the gold standard, which supported the dollar’s value. In 1931, investors started trading their dollars for gold, creating a dollar run.
  3. As a result of the run on the dollar, the Fed raised rates again, trying to maintain the dollar’s value—however, this further restricted access to business credit, prompting a rash of bankruptcies.
  4. The next failure was not increasing the money supply to combat to ongoing deflation of prices.
  5. There was a run on banks for cash, causing a reinforcing idea, which caused more banks to fail, which created more panic and bank runs. While all this was happening, the Fed ignored the bank runs and bankruptcies. These combined reinforced the compounding panic and caused most people to withdraw their money from the banks, further lessening the money supply.

The Fed’s basic failing didn’t put enough money into circulation to get the economy moving again. Instead, the Fed allowed the money supply to fall by about one-third.

According to a paper by San Jose State University, the cause of the Great Depression was the decline in the money supply. This supports Bernanke’s idea that the Fed didn’t do enough to stave off or lessen the Great Depression.

When he was chairman of the Fed, these ideas led Bernanke to loosen monetary policy during the Great Financial Crisis (GFC) in 2007.

There is a lot of controversy regarding these quantitative easing theories and their impact; many feel they prop up markets and instill a false sense of security.

What Ended The Great Depression?

There are many different ideas regarding the ending of the Great Depression. Almost as many as what were the causes of the event.


But many agree that Franklin Roosevelt’s election was the beginning of the end of the Great Depression. FDR, elected in 1932, immediately went to work trying to lessen the impact of the Great Depression.

He created government programs using the New Deal to start the end of the Great Depression. During his first 100 days, he began the New Deal, which created 42 new agencies to create jobs, unionization, and unemployment insurance.

Some of these programs exist today, helping to preserve the economy and preventing another depression.

However, many argue that the start of World War II ended the Depression. With the expansion of war production, the economy boomed from 1939 to the war’s end in 1945.

Many contend that if FDR had spent as much on the war, he would have ended the Depression. During the nine years from the beginning of the New Deal and the Pearl Harbor attack, FDR added to the national debt by $3 billion.

In 1942, defense spending was $23 billion in debt during the war. The U.S. added $64 billion of additional debt in 1943, far exceeding the spending that FDR put into action during the early years of the Great Depression.

In all likelihood, it was a combination of factors that helped end the Great Depression. First, mother nature let up on the drought, allowing farmers to grow and harvest crops, which helped feed the nation.

Second would be the election of FDR and the creation of economic activity stemming from the New Deal. Providing work and getting workers paid provided an outlet for spending, which helped the price rise, putting money in everyone’s pockets.

Third, the expansion of World War II exploded economic activity in the U.S., which helped put even more people to work, providing more income. Although it was at a terrible cost in lives and misery, the war did increase economic activity.

A Sample of Statistics from the Great Depression

The Great Depression began as a recession in 1929 but quickly accelerated into a downturn into a depression. In late 1929 real output and prices fell quickly and sharply.

Below are some numbers in comparison to the Great Recession of 2007:


Great Depression

Great Recession

Industrial Production






Price Index






As we can see from above, the Great Depression was far more severe regarding economic productivity, prices, and employment.

Something not often discussed is the impact the Great Depression had around the world. Because most of the world was on the gold standard, price deflation was felt worldwide because of the falling prices of industrial products.

Many experts felt that the Great Depression accelerated the causes of World War II, with the impact of price deflation and unemployment felt worldwide.

As countries experienced the depression, Germany and Japan, in particular, were hit particularly hard, spurring some of the causes of the beginning rise in power of the dictators in those countries.

Investor Takeaway

The Great Depression was a terrible, horrible period in history. Learning lessons from that time helps us prevent some of the mistakes from the past.

As value investors proceeding cautiously is always the best policy; using the Great Depression to understand what can happen in the worst possible circumstances allows us to plan for those situations.

Granted, many causes of the Great Depression have been altered, such as they can’t happen again. For example, with the ending of the gold reserve and the beginning of quantitative easing, we have removed money from the economy.

It is interesting to study history because much of what we experience today feels like it is the worst time ever, but context helps give context.

For example, unemployment recently spiked quite high during the Covid lockdowns and remains high, but when looking at it in comparison, it doesn’t rise to those levels. I am not trying to belittle anyone going through a difficult time rather than looking at information over the bigger picture.

We often struggle with the near-term as we think today is more horrible than the past. Take 1932, for example; it was one of the worst times ever, and looking at situations in context allows you to be more rational in your decisions.

With that, we will wrap up our discussion of the Great Depression and the timeline of the Great Depression.

As always, thank you for reading this post; I hope you find something of value on your investing journey.

If I can further assist, please don’t hesitate to reach out.

Until next time, take care and be safe out there,


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