The Great Depression Narrative Essay
To know the effects of the Great Depression we need to be able to understand it first. We need to know exactly what caused this recession and the way in which we slowly recovered and how we did. We can assure ourselves that there were lots of influences and we can assure ourselves that much change came from this. After all, the United States would soon find ways to reinvent themselves after this standstill.
Although the United States had depressions before and during World War 1, nothing hit as hard as the Great One. It was the deepest and longest economic downturn in the history of Western industrialized world. It all started soon after the Stock Market Crash of October 1929. This was due to the fact that many people felt that they could make a fortune from the stock market, forgetting the stock market was volatile. They did what we call “Buying on Margin” where investors paid 10-20% of the value of the shares but were borrowing 80-90% of the value of the shares.
They borrowed to buy shares and firms. By the end people who had borrowed money were forced to join the rush to sell their shares to try and redeem their debts. This was what many people recall as “Black Thursday” when a record of 12 million shares were traded, investment companies and leading bankers attempted to stabilize the market by buying great blocks of stocks. It didn’t work out, and eventually went on to “Black Tuesday” where in just 4 days the stock market dropped 25% and lost 30 million equivalent to 40% in market value.Over the next several years from 1929-1932 consumer spending and investment dropped. This caused steep declines in industrialized output and rising levels of unemployment due to failing companies laying off.
Even wage income fell at an almost 43%. Leaving 3.2 million people unemployed by 1930. Not only did it affect the consumers but farm prices fell drastically causing many farmers to lose their homes and land. Crisis in the banks all around America failed too since hundreds of thousands of customers began to withdraw deposits. Eventually there was no money to loan.
Wages for those who still has jobs fell 42% during the first year of depression. GPD was cut in half from 103-55 from inflammation because prices fell at an astonishing 10%. This was all left to the hands of President Hoover and during his presidency, he passed the Smoot-Hawley Tariff, which was just another strategy to aid farmers which didn’t work. It ended up helping only businesses in general.Finally just after the biggest blow to America, came the change they needed. This fresh start was President Franklin Delano Roosevelt who came to serve 4 terms.
He easily defeated Hoover in 1932 who originally called the Stock Market Crash a “passing incident in our national lives”. With this new President came the changes he promised. Pledging to use the power of the federal government to make American lives better. He was so deliberant that during his first 100 days as president the New Deal was signed into Law. This “New Deal” created agencies designed to create jobs, allow unionization and provide unemployment insurance. Some major ones were CCC which gave jobs to unemployed youths 17-27 years of age during 1933.
The NRA which drew up regulations and coded to help revitalize industry. Most important the FDI which was a corporation that guaranteed bank deposits so no other depression would hit us where it matters the most. This New Deal changed the way we looked at our Government. It was the first time the government took many responsibilities for the welfare of the people. This was a closeness between the government and the people that had never existed to a degree before. After 1935 came the Second New Deal which was actually the first major legislation.
This is where the WPA came to be which really boosted the unemployed. It gave jobs to thousands of people, to work on building bridges, houses, fix roads everything from construction to the arts. The next major reform that helped to stabilize our economy is the creation of the Social Security System, which is a net for all Americans even today. The National Labor Relations Act that gave workers right to form union and bargain collectively for high compensations and fairer treatment. Other administrations that served to rapidly create manual labor for the time being were both the CWA and the NYA.
During 1936 did the top tax raise to 79%, GNP grew a record 14.1% and unemployment fell to 16.1%. The next couple years it felt like we were going back to recession. That was until 1939 when the United States began emerging from the Depression as it borrowed and spent $1 billion to build its armed forces preparing for World War II. From 1939 to 1941 the U.
S manufacturing will have shot up a phenomenal 50%.Although the war was the largest tragedy in human history the United States emerged as the world’s greatest economic source again. This war resulted in the drafting of 12 million young men into military service, and the creation of millions of jobs. This gave the boost America needed to be relieved from the Depression slump they were put in for a decade. This recession was one of the most important that showed us to learn from our mistakes and see how delicate our economy was back then. This helped create many acts and reforms to help us tighten our economy and make sure a crisis like this would be almost impossible to happen again.
