Lessons From The 1930’s

Are we heading for another Great Depression?

On Black Thursday, October 24, 1929, the headlines read “Wall Street in Panic as Stocks Crash.” On Monday, October 28, 1929, the Dow Jones Industrial Average declined nearly 13 percent. On the following day, Black Tuesday, the market dropped nearly 12 percent. By mid-November, the Dow had lost almost half of its value. The slide continued through the summer of 1932, when the Dow closed at 41.22, its lowest value of the twentieth century, 89 percent below its peak. The Dow did not return to its pre-crash heights until November 1954. Part of the problem in creating a new global agreement was the U.S. Smoot-Hawley tariff.

Between February 19 and markets closing on Friday, April 4, 2025, the Dow has dropped 14.1 percent, the S&P 500 17.4 percent and the tech-heavy Nasdaq Composite 22.3.

Trump’s tariff crash is among the worst in the 21^st century.

As the world grapples with economic uncertainty after Trump's reciprocal tariffs were announced on Aoril 2, history may be on the verge of repeating itself. Like the late 1920’s, the current economy includes high debt, wealth inequality, and low growth in energy consumption.

If U.S. markets are correcting, U.S. consumption, which accounts for two-thirds of the economy, will come under pressure due to higher inflation, stagflation, and evaporating wealth.

Yesterday, in an Oval Office press conference, Trump said "You know, our country was the strongest, believe it or not, from 1870 to 1913. You know why? It was all tariff based. We had no income tax. Then in 1913, some genius came up with the idea of let’s charge the people of our country, not foreign countries that are ripping off our country, and the country was never, relatively, was never that kind of wealth. We had so much wealth we didn’t know what to do with our money. We had meetings, we had committees, and these committees worked tirelessly to study one subject: we have so much money, what are going to do with it, who are we going to give it to? And I hope we’re going to be in that position again.”

Trump, of course, is dead wrong again.

Heather Cox Richardson explains:

“Aside from this complete misreading of American history—Civil War income taxes lasted until 1875, for example, tariffs are paid by consumers, the Panics of 1873 and 1893 devastated the economy, few Americans at the time thought the Gilded Age was a golden age, and I have no clue what he’s referring to with the talk about committees—Trump’s larger motivation is clear: he wants to get rid of income taxes.

Congress passed the 1913 Revenue Act imposing income taxes to shift the cost of supporting the government from ordinary Americans, especially the women who by then made up a significant portion of household consumers, to men of wealth. Tariffs were regressive because they fell disproportionately on working-class Americans through their everyday purchases. Income taxes spread costs more evenly, according to a man’s ability to pay. The switch from tariffs to income taxes helped to break the power of the so-called robber barons, the powerful industrialists who controlled the U.S. economy and government in the late nineteenth century.”

Let’s look at some of the consequences of the global depression of the 1930’s. Note that some differences between 1930 and today are the explosion in global human population, from fewer than 2 billion people to 8.2 billion today, the reduction in available energy sources, and the vast increase and speed in communications technology. Note that some of these differences make the outcome of unchecked tariffs and insane policies far, far worse, for humans, other occupiers of Earth, and on Earth itself.

White Angel Breadline, San Francisco. Dorothea Lange, 1933

General Strike, Dorothea Lange, 1934

Free Soup Kitchen, Opened by Al Capone, Chicago, 1931

Central Park Hooverville, with Central Park West in the background, 1932

One major problem during the Great Depression was widespread homelessness. Americans who could not pay their rent or make their mortgage payments found themselves on the street. In 1932, 273,000 Americans lost their homes. In 1933, a thousand mortgages a day were being foreclosed, forcing families to find other shelter, and about half of the nation’s home mortgages were in default.

Flood victims lined up to get food and clothing from Red Cross relief station, Margaret Bourke-White