Looking Back
A glimpse at Virginia business history

by Paul Levengood
for Virginia Business
May 2007

75 YEARS AGO

When the stock market crashed in 1929, Virginia leaders confidently predicted that their state would be immune from the effects. After all, Virginians counted on dividends for less than 5 percent of their income. However, in 1930 a severe drought caused close to $100 million in lost agricultural production and resulted in great suffering across the state.

By 1932 the industrial base of Virginia cities also had declined as demand for textiles and metal goods slumped dramatically. The state’s industrial output dropped from $897 million in 1929 to $575 million in 1932, and the number of unemployed reached 145,000.

Those men who had believed Virginia would be sheltered from the ravages of the Great Depression were confronted by 1932 with a frightening series of bank failures, most notably in the Southside cities of Danville and South Boston.

The response of the Hoover administration to the nationwide depression and banking crisis was the creation in January 1932 of the Reconstruction Finance Corp. (RFC), which would loan nearly a billion dollars to banks, including a number in Virginia. The support helped stem the tide of the financial panic. But more significant for Virginia was that the government spending embodied by the RFC set a precedent that would be followed and expanded by Hoover’s successor, Franklin Delano Roosevelt. Increasingly in the last two-thirds of the 20th century, Virginia’s economy would benefit greatly from lavish federal government spending.

Paul Levengood is managing editor of the Virginia Magazine of History and Biography at the Virginia Historical Society in Richmond. He also serves as the program coordinator of the Reynolds Business History Center. For more information, go to, www.vahistorical.org.