The Great Depression often comes to life in our minds in stark black and white. The iconic imagery, etched into our collective memory, depicts scenes of migrant farm families, anxious crowds during bank runs, lengthy food lines in urban settings, and the ragged communities of Hoovervilles. Such images are imbued with a sense of darkness, depression, and despair.
These monochrome snapshots encapsulate the grim reality of the time: a staggering 25% of the workforce was jobless, one-third of banks collapsed, and the U.S. GDP plummeted by 30%. Countless farms were lost to foreclosure. For those lucky enough to secure employment, wages had suffered a drastic reduction of over 40%. Unlike other historical downturns, the Great Depression extended painfully, lasting for more than a decade. It was the enduring nature of this crisis that compounded its hardship.
The culture of the 1930s was deeply influenced by this economic turmoil. Notably, Al Capone, troubled by the sight of “poor devils starving,” established a soup kitchen in Chicago that served 2,200 individuals each day, featuring a sign that read “Free Soup Donuts and Coffee for the Unemployed.” This gesture further cemented his Robin Hood-like image. By 1932, three years into the depression, the popular refrain of the day was Bing Crosby and Rudy Vallee’s “Brother, Can You Spare a Dime?”
Even seemingly trivial details held symbolic weight, such as the decision by the creators of Monopoly to represent the era with a ragged boot token.
Yet, from a historical perspective, the Great Depression also highlights the enduring resilience of the American spirit, even when the American Dream seems under siege. The nation’s history is marked by financial peaks and troughs. From the financial panics of the 1700s to the depressions and recessions of the 1800s and 1900s, and onward to the crises of the 2000s, economic volatility is intricately woven into the very essence of our national narrative.
Juxtaposed against this darkness, the American drive and ambition were still there. Dance contests played across the country, with contestants hoping they would be the one to dance the longest and win a cash prize. The game of Monopoly became the rage with the dream that one could make and achieve wealth. And Americans were caught up in the idea that a superhero like the Green Hornet could take on evil.
In total, we’ve had 48 recessions across 250 years, and the average has lasted 17 months. That means the US economy has been in a challenging moment around 25% of the time. Yet whenever the chips are down, our financial prosperity finds a way to bounce back.
And The Great Depression is the Before and After in US economic life, a dark time that generated the two cornerstones for American prosperity. In those moments we learned what steps were needed to shape American life.
The biggest lesson learned was simple: In order to survive and thrive, we need to evolve our institutions. Social Security was created to be a social safety net. The devastating effects of the Great Depression meant that many older Americans’ savings were wiped out. One-third of them faced destitution and their only financial backstop, if there was one, was family and friends.
While the idea of a government benefit for retirement seemed novel, it was also idea that went as far back as the Romans and modernized by the Germans in the 1880s. And unlike other government intervention, Social Security did not immediately start paying out in 1935 when FDR signed it into law. Rather, payroll taxes began being collected in 1937, with the first benefits paying out in 1940 to over 8.3 million Americans who were over age 65. Could you imagine us having the same restraint today?
But Social Security wasn’t the only institution that evolved. To this day, we still have the Tennessee Valley Authority and the National Labor Relations Board. Stronger bank and financial regulations helped protect the average American, including the creation of the FDIC to insure bank deposits and the SEC to oversee markets and prevent manipulation.
And the government learned that intervention can make a difference. During the Covid-19 pandemic, stimulus checks, the development of the Paycheck Protection Program (PPP), and mortgage and student loan abatement programs made the difference for millions of Americans.
There may be some who don’t agree with this level of federal intervention, but what is often missed is something very special: It is an American Superpower. Whenever there is a global crisis, other countries lag behind the United States in recovery. With the 2008 economic crisis, our economy officially exited the recession in June 2009, while Europe’s recovery dragged on for years.
In the Great Depression, we didn’t have this power yet. And now, we take for granted that we can pass go and collect $200, just like in Monopoly.
But the lessons of the era weren’t only economic — they were also about true leadership. One of the most surprising aspects of the Great Depression is that the man who understood finance was unable to solve it. Herbert Hoover was phenomenal with money. In fact, he was one of our wealthiest presidents. But he had built that wealth through intelligence and bootstrapping; the Great Depression required a different approach.
The Great Depression taught us that it isn’t just financial decision making and solutions that saves us. It is vision.
So it’s rather apt that, on the anniversary of our country, we stand again at a crossroads of financial troubles. Our citizens want to believe that the American Dream is still alive, yet the affordability crisis threatens to drown the average American. The transition to the AI age is rocky and, for many, frightening.
What history tells us is that, like in the Great Depression, it is the right leader and the right institutional evolution that can pull us out of this crisis and salvage the American Dream.
Megan Gorman is the author of “All the Presidents’ Money: How the Men Who Governed America Governed Their Money.”