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How Did The Great Depression Affect The Economy

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The Great Depression not only highlighted the vulnerabilities of the American milieu but spurred intensive revaluation, setting a prosperous forecast for the future of America. The unprecedented crisis influenced widespread poverty and unemployment, compelling significant shifts in societal norms and family dynamics. Traditional gender roles were revamped as women began to increasingly join the workforce in hopes of aiding their households. Concurrently, the economic collapse necessitated policy innovation and government intervention. These measures were formed to provide relief, stimulate recovery, and reform the financial system, thereby redefining the relationship between the federal government and the economy. Furthermore, this era of economic …show more content…

The United States Gross Domestic Product (GDP) declined by nearly 30% between 1929 and 1933, while industrial production fell by 47% (What is the difference between a recession and a depression?, 2007). Thousands of banks failed, erasing the savings of American civilians. The extent of the crisis was further highlighted through Marriner S. Eccles, Chairman of the Federal Reserve, to Congress in 1933 stating “Our banking system was in collapse. The public had lost faith in financial institutions” (Marriner Eccles, n.d.). The collapse of the banking system was at the forefront of economic impact, these bank failures not only disintegrated public confidence but also caused a severe contraction in monetary supply, exacerbating the economic downturn. Businesses were forced to close or cut back drastically due to the inability to receive loans, leading to further job losses. The agricultural sector was particularly affected, with farm prices falling by 60%, subsequently ensuing rural poverty and displacement (Why It Happened, 2021). The economic devastation prompted significant changes in government policy, including the implementation of the New Deal programs aimed at economic recovery and reform. Historians such as Barry Eichengreen have argued that the New Deal represented a crucial shift towards a more …show more content…

The election of Franklin D. Roosevelt in 1932 marked a turning point in American politics. His New Deal policies expanded the role of the federal government in economic affairs, introducing programs like Social Security, unemployment insurance, and various public works projects (Badger, 1989). Roosevelt’s first inaugural address in 1933, captured the urgency of the situation: "This nation asks for action, and action now. We must move as a trained and loyal army willing to sacrifice for the good of a common discipline". Roosevelt’s New Deal represented a fundamental shift in the relationship between the government and the economy. Prior to the Depression, laissez-faire policies dominated, with minimal government intervention in the economy. The New Deal, however, marked the beginning of a more active government role in providing economic security and promoting social welfare. During this period, in depth scrutiny of such capitalist systems advocated by the government resulted in political movements which promoted radical changes. These changes consisted of the adoption of Socialist and Communist parties. Such movements garnered mass support through the middle- and lower-class demographics as they were the individuals most affected by the economic disparity and uncertainty. Additionally,

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