The period from August 1929 to May 1937 was a very trying time in American economic history. On October 29th, 1929, the American stock market crashed and our economy went down with it. This date known as “Black Tuesday,” will forever be remembered in American history. This business cycle included the ultimate economic low-point, along with an economic resurgence that brought a country together. The 43 months of recession from August of 1929 until March of 1933 represent the single worst business cycle in American history to date, and exemplifies why we need to avoid a similar situation at all costs. The stock market hit rock-bottom on July 7th of 1932, when the Times index was only 33.98. The figure marked a decline of over 89% from when it topped out at 311.90 on September 19, 1929. It was later declared that the trough occurred in March of 1933, three years and seven months after the previous peak. The unemployment rate also hit an all time high, soaring to 24.9% in 1933. That means that in 1933, only one out of every four people who were looking for work were able to find it. In October of 1932 inflation hit an all time low at -10.74%. Interest rates also reached an all-time low in 1933 bottoming out at 1.5%.
The monetary policy tools that were used during the Great Depression may have actually caused the recession to continue become more severe over the years following the stock market crash. In the 1930s, there was extreme dissatisfaction with the failure of monetary policy to prevent the depression, or to revive the struggling economy, led to sweeping changes in the structure of the Federal Reserve System. (Wheelock 3) They used a tight monetary policy which meant that the money supply decreased as well as the price level. This was not the correct policy to implement, and many economic researchers have concluded that this was the very reason that this made the Great Depression even worse. A much more aggressive monetary policy should have been used and...