ABSTRACT
The history of social insurance is, in many respects, the history of market failure, the inability of economies to allocate resources in a way that meets basic needs and wants. These government programs are also a history of the forces of political change, and the democratization of power. The stock market crash of October 29, 1929 is acknowledged by most economies as the beginning of the Great Depression in the US. On the surface, the crash resembled those of the later 19th century, but its consequences could prove to be much more severe. Panic fed on itself. Fire sales of assets caused asset prices to fall further, forcing some of the major financial institutions into bankruptcy. Bank runs followed, and some of America's major corporations such as AT&T, General Electric, and RCA, experienced significant financial losses. Much of these losses were due to a significant decline in consumer spending, which was driven by cuts to wages, and fears of deflation. By 1932, unemployment had reached over 30%; the stock market had lost over 40% of its value; over 10,000 banks had declared bankruptcy and over $26 billion of wealth had vanished. The stage was set for a dramatic change in government policy.
