---> 1929 - 2012
Although the Great Depression was relatively mild in some countries, it was severe in others, particularly in the United States, where, at its nadir in 1933, 25 percent of all workers and 37 percent of all nonfarm workers were completely out of work.
President Roosevelt came into office proposing a New Deal for Americans. The centerpieces of the New Deal were the Agricultural Adjustment Act (AAA) and the National Recovery Administration (NRA), both of which were aimed at reducing production and raising wages and prices.
The Supreme Court ruled the NRA unconstitutional on May 27, 1935, and the AAA unconstitutional on January 6, 1936. Released from the shackles of the NRA, American industry began to expand production. By the fall of 1935 a vigorous recovery was under way.
Senator Robert Wagner, in the summer of 1935, authored the National Labor Relations Act to ensure that union members could force other workers to join their unions with a simple majority vote, thus effectively monopolizing the labor force.
Several other factors also pushed up real labor costs. Social Security taxes were instituted in 1936 and 1937. Also, Roosevelt had pushed through a new tax on undistributed corporate profits, expecting this to cause firms to pay out undistributed profits in dividends. Though some firms did pay out part of the retained earnings in larger dividends, others paid bonuses and raised wage rates to avoid paying their retained earnings in new taxes. As these three policies came together, real hourly labor costs jumped without corresponding increases in demand or prices, and firms responded by reducing production and laying off employees.
The second major policy change was in monetary policy. Following the end of the contraction, banks, as a precaution against bank runs, had begun to hold large excess reserves. Between August 1, 1936, and May 1, 1937, in three steps, the Fed doubled reserve requirements for all classes of member banks, wiping out much of the excess reserves, especially at the larger banks. The banks, burned by their lack of excess reserves in the early 1930s, responded by beginning to restore the excess reserves, which entailed reducing loans. Within eighteen months, excess reserves were almost as large as before the reserve requirement increases, and, necessarily, the stock of money was lower.
By June 1937, the recoveryâ€”during which the unemployment rate had fallen to 12 percentâ€”was over. Two policies, labor cost increases and a contractionary monetary policy, caused the economy to contract further. Although the contraction ended around June 1938, the ensuing recovery was quite slow. The average rate of unemployment for all of 1938 was 19.1 percent, compared with an average unemployment rate for all of 1937 of 14.3 percent. Even in 1940, the unemployment rate still averaged 14.6 percent.http://www.econlib.org/library/Enc/GreatDepression.html
Frankly speaking, let's give credit where credit is due for the similarities between the Great Depression and our current recession.
<--- Thanks Barney, Mr. Roosevelt and Mr. Marshall Davis