How The Great Depression Has Shaped America

There are many events in American history that have shape our country, and perhaps our world. Some of these events include the American Revolution, the Civil War, World Wars I and II, and many more. Although, there is one event that most of us forget and most of us do not know that it shaped our world substantially. The name of this event is the Great Depression. The Great Depression changed our views on particular matters and cluttered our economy.

What most people do not know, is that there was a happier and more successful time before the Great Depression. This time was called the Roaring Twenties. Beginning in the early 1920s, the Roaring Twenties were a time of social and political change. Many Americans started migrating from rural
areas to urban areas as well. America’s wealth was doubled between 1920 and 1929. Most people wore the same clothes, danced to the same music, and danced the same way. The “new culture” angered many Americans and most people thought that it was a bad influence on the youth. Also the nation’s economy was booming. After World War I, America was the hub of industry. Within a few short years, many inventions came to be. Cars, household appliances, and other mass-produced products led to a vibrant consumer culture. This led to a stimulating economy growth.

Following this glorious time, came a time of sorrow and failure.
On October 29, 1929, known as Black Tuesday, share prices on the New York Stock Exchange completely collapsed. Most people think that the Great Depression began because of the stock market crash. However, this isn’t true. Some hold the government responsible for the start of the Great Depression because of three things, interest rates, money value, and money supply. To preserve the dollar’s value, the federal government raised interest rates. This further restricted the availability of money for business. As another result, more bankruptcies followed. When the stock market crashed, investors turned to the currency markets. Since gold standard supported the dollar, speculators, or desperate investors, began trading in their dollars for gold. This created a run on the dollar. One mistake investors made was withdrawing their deposits from banks. With the banks failure, it destroyed any of the consumers’ remaining confidence in financial institutions. This further decrease the money supply. Many people were suffering from these causes and the Great Depression. To help end the Great Depression and the citizens suffering, the Hoover Administration and the Roosevelt Administration offered
support.

As matters got worse, Hoover was placed in a dire situation. In response to the “people’s cry”, Hoover came up with an idea. His idea was to support the failing banks and other institutions with government loans. By doing this, the banks in turn would loan to buisnesses, which would be able to hire back their employees. Hoover’s idea worked, but his term was coming to an end. So, in 1933, Franklin Delano Roosevelt became president. According to Hoover’s morals, he said that the government should not intervene in the economy and that it did not have the responsibility to create jobs or provide economic relief. Consequently, Roosevelt thought that at the nation’s point in time, the federal government should help be involved in the economy’s well-being. He got involved and talked with the people, not at them. Roosevelt also came up with “fireside chats”. These were talks from the president to the people over the radio. This restored the public’s confidence. During Roosevelt’s 100 day’s in office, his administration passed laws that stabilized industrial and agricultural production, created jobs, and stimulate recovery. He also signed the New Deal law. This law created 42 government agencies such as the FDIC (The Federal Deposit Insurance Corparation) and the SEC (The Securities and Exchange Commision). These programs helped protect the economy and prevent another Great Depression.
However, the New Deal did not end the Great Depression. It was when the united States joined World War II because of the Japanese attacks on Pearl Harbor. When factories were in full production mode, the nation’s economy boomed. This expanded the industrial production and an increasing imployment rate. Finally, in 1939, the Great Depression ended. Consequently, the nation was still in a clutter.

The United States economy shrank 50 percent in the first five years of the depression. By the end of 1929, 650 banks had failed. In 1930, the economy shrank again by 8.5 percent. By 1933, the country had expirenced 5 years of an economic breakdown. The economy only produced $57 billion, half of what it produced in 1929. Also, the national debt increased substaintially due to the Great Depression, the New Deal, and World War II. even though World War II brought a boom in employment, many people still were unemploted. Right after the Roaring Twenties ended in 1929, the unemployment rate was 3.2 percent. The following year, the rate had doubled to 8.7 percent. It then skyrocketed to 15.9 percent to 23.6 percent in 1932. By 1933, the unemployment rate was nearly 24.9 percent. That is almost 15 million people without jobs! It has been recorded that there has never been a higher unemployment rate since the Great Depression.

We can never imagine what it must have been like to expirence an event like this. A shruken economy and a very high unemploment rate result in a very unstable time. Thankfully, Hoover and Roosevelt’s