History of the Great Depression and the New Deal

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Table of Contents

Introduction
Main body
Conclusion
Bibliography

Introduction

Scholars have not yet arrived at the conclusion as to the exact causes of the economic decline, which started in the United States in1929 and ended in the late 30s. The Great Depression is considered to be the largest economic collapse in modern history. It had disastrous effects in the developed and developing world.

In the United States this crisis had almost catastrophic effects: the unemployment rate increased significantly (at least 12 million), more than 5000 banks were closed down, the industrial output decreased, at least 5 million American farmers lost their land because of debts.

Main body

As far as the causes of the Great Depression are concerned, we may call them a combination of different factors. According to the prominent American economist John Keyne, the main cause of the Great Depression was the shortage of money supply, which was dependant on the gold reserve, in the meantime, the industry output significantly increased and it leads to deflation (landslide of prices), which resulted in financial instability and bankruptcy (Timothy G. O’Driscoll, 73).

Another factor, which leads to the Great Depression was the decline in international trade. Some historians believe that it was connected with the U.S. Smoot-Hawley Tariff Act. According to this act of legislation, the government tried to protect the American manufacturer and imposed high taxes on foreign wares, but these measures significantly hindered international trade (Timothy G. O’Driscoll,75).

If it had not been for the new policy, which the Roosevelt government pursued the results of the Great Depression would have been much more severe. The term “The New Deal” can be defined as a set of reforms, which were carried out by the American government between 1933 – 1938 in order to give work to the unemployed and amend business.

The so-called “The First New Deal” was a short-term recovery program. The Roosevelt administration launched emergency relief and work relief programs. The “Second New Deal” included labor union support, the Social Security Act, and programs, aimed at helping farmers and migrant workers.

First of all, the Roosevelt administration had to close down nearly all the banks in the United States, until the government could adopt new legislation. These actions created a system of new banks under government supervision, which gave loans to the unemployed.

The Roosevelt government adopted the following acts of legislation: Emergency Banking Act 1933 – the law, which protected peoples deposits from losses. It enabled the government to gain the publics confidence in the American banking system. Another act of legislation is the National Labour Relations Act, which obliged employers to deal with trade unions and gave the right to the worker to form trade unions. (James L Roark,135) Moreover, the government passed Agricultural Adjustment Act 1938, which guaranteed the farmers their minimum income. Naturally, this is not the entire list, but these laws seem to be the most important.

Conclusion

Furthermore, the government established a great number of agencies, which were helping the unemployed. For instance, the Civilian Conservation Corps of 1933, which employed jobless single men between the ages of 18 and 25. The second agency was Reconstruction Finance Corporation gave money to state and local governments to help the poor and unemployed.

Thus, we may conclude that the causes and effects of the Great Depression are rather a controversial issue and still requires some research.

Bibliography

Ben S. Bernanke. ”The Great Depression”. Journal of Money Credit & Banking 27.1 (1995): 11-15.

James L Roark et al. The American Promise: A Compact History. Paperback Publisher, 2006.

David E. Hamilton.”Rethinking the Great Depression”. Journal of Southern History 70.12 (2004): 465- 470.

Timothy G. O’Driscoll. ”What Caused the Great Depression?” Social Education. 71.2 (2007): 70-76.

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History of the Great Depression and the New Deal

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