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How Did The New Deal Contribute To The Great Depression

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Many conditions in the United States throughout the 1920s led to a worldwide state of economic depression. This Great Depression had many factors that contributed to its occurrence, including the stock market crash, an economic lull after World War I, a reduction in public spending habits and tense foreign relations after high tariffs were imposed. After World War I, the production of goods rapidly declined, leading to a decrease in income for many businesses, especially farmers. This resulted in more loans being taken out, which eventually led to the stock market crash of 1929. The stock market crash was the final catalyst for the onset of the Great Depression; after people began selling their stocks because economic growth was slowing, stock …show more content…

The National Industry Recovery Act (NIRA) wrote codes for each industry discussing production standards, prices and working conditions and worked in tandem with the National Recovery Administration (NRA) that verified code-following companies by putting blue eagle stamps on those products. According to Charles Fusco, an immigrant worker, “... the N.R.A I think was very good -- it gave everybody a chance”. For smaller business, like farms, the New Deal came up with other solutions. To help these farmers, who greatly suffered from the effects of the Depression, the New Deal instituted the Agricultural Adjustment Act that paid farmers to grow fewer crops, lowering surpluses and giving them more income by increasing supply and demand. Most notably, the Social Security Act was passed as part of the New Deal that set up pensions for older people to free up jobs, gave unemployment insurance to those who needed money in between jobs, and gave states money to support dependent children and those with disabilities. Giving people money so they could have the basic necessities of life was important in this time, as President Roosevelt said, “... the Congress is about to pass legislation that will greatly ease the mortgage distress among the farmers and the homeowners of the nation, by providing for the easing of the burden of debt now bearing so heavily upon millions of our people”. Some argue that the New Deal was bad because it did not speed up recovery - the Great Depression still lasted for twelve long years when full recovery came in 1941. Although the Great Depression lasted a long time, without the New Deal it could have gone on longer and more drastic measures could have been taken in attempts to restore the country to its former state. According to digitalhistory.edu, countries across Europe that were harshly affected by the Great Depression

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Following the end of the First World War, the United States was initially prosperous. In 1929, that prosperous age about-faced into a downward spiral that enveloped the entire country. What was eventually called the Great Depression was essentially caused by four major events. At the start, the stock market was strong and thriving and the population was willing to invest in it. Americans were so confident in the market, in fact, that it was common for them to take out loans to fund their investments.

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The great depression in the US, which began in 1929, and ended in 1938 was caused by many different things all happening at the same time in the economy. The wall street crash in October 1929 was one of the main causes, when the stock markets crashed. This was caused by many things, but the main reason for it was a deflation (which is an event where the general level of prices in an economy are reduced) On October 24th (black Thursday), share prices dropped by 14 billion dollars in a day, and more than 30 billion in a week. This forced many of the banks to close, due to them investing their client’s savings in the stock market.

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With the crash of the stock market, the booming times of the 1920s came to a sad end. The crash and its aftermath revealed major flaws in the American economy. These flaws helped transform a stock market crisis into the Great Depression. Herbert Hoover was the president of the United States at the time of this devastation. Hoover had served in the administrations of both Warren G. Harding and Calvin Coolidge.

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For example, the Works Progress Administration (WPA) created jobs for millions of unemployed Americans through public works projects, such as building schools and roads. In addition, the National Recovery Administration (NRA) established codes that regulated wages and prices, which helped increase consumer purchasing power. As a result, economic output began to recover, and GDP increased by 10% between 1933 and 1936 (Document C). This evidence demonstrates that the New Deal was effective in promoting economic growth and stability. Despite its successes, the New Deal also had some significant drawbacks.

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According to Encyclopedia of American History, an infographic shows the Farm Credit Administration(FCA) coming into effect in 1933(Document 10). The purpose of the FCA was help farms out by placing a lower mortgage price on farms for a longer set amount of time. Another aspect that workers obtained from the New Deal was the National Industrial Recovery Act(NIRA),

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The Great Depression was a worldwide economic downturn that began in 1929 and lasted until 1939. It was one of the most severe and longest lasting depressions ever and significantly impacted the lives of millions of Americans. It was an extremely hard time for many, as factories were shut down, farms and homes were lost to foreclosure, mills and mines were abandoned, and people went hungry. The resulting lower incomes meant the further inability of the people to spend or to save their way out of the crisis. The New Deal, with multiple programs assembled by President Franklin D. Roosevelt, included new constraints and safeguards on the banking industry and efforts to re-inflate the economy after prices had fallen sharply.

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In order to attain success in these objectives, many relief programs were established, which also constructed many jobs for Americans in the process. First off, relief programs such as the Federal Emergency Relief Administration were built and gave millions of unemployed workers employment and money to supplement their penniless paychecks. In addition, conservation programs were settled which raised employment while conserving natural resources and civilizing America. Agriculture was improved by cutting down the production of produce which would raise prices, and industrial workers gained employment after corporations agreed to terms that would benefit the welfare of employees and limit competition. Also, the Wagner Act, signed by president Roosevelt, allowed federal support of labor unions to benefit the interests of employees.

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The New Deal included programs such as the Civilian Conservation Corps (CCC), the Federal Emergency Relief Administration (FERA), and the Works Progress Administration (WPA), among others. These programs provided jobs and assistance to millions of Americans, which helped to stabilize the economy and provide some relief to those most affected by the Depression. While Roosevelt's policies were certainly not a panacea for the problems caused by the Great Depression, they did have a positive impact on the country. Unemployment, for example, dropped from 25% in 1933 to 14% in 1937, and overall economic growth increased during Roosevelt's presidency. However, the impact of the New Deal on future generations of Americans is a more complicated issue.

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The NRA also tried to create jobs and an economy by starting public works projects. By the second New Deal, there were numerous administrations, as depicted by Document C. The New Deal also introduced the concept of Social Security and Welfare in 1935. Both would act as a safety valve for Americans, as they could be confident that the government would take care of them if they needed it. Social security and welfare were highly advertised by the Social Security board as a way to comfort distressed Americans, who were devastated by their predicament (Document E).

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The New Deal was successful in terms of providing relief and improving economic conditions . The first New Deal focused on economic recovery. It introduced laws that would prevent corruption and irresponsibility in the banking system which prevented banks from failing for the entire year of 1936. It also created several agencies, such as the NRA, aimed at providing relief to the people. Such agencies provided work for many unemployed American citizens through government jobs or public-works projects, however, it was not enough as there were still thousands of Americans who were unemployed.

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(Library of Congress, 1) The New Deal made a huge impact on the economy and changed the way that the world was at the time. It created opportunities for people who did not have a sufficient amount of money and who were still severely struggling from the Great Depression. Life after the Great Depression took a long time to return completely back to normal, but once it did, people were still affected by it. “Most did not experience full recovery until the late 1930s or early 1940s,

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The agriculture remained in depressed conditions from 1923-1929 (Mcelvaine, 2004). Another issue faced and that was a cause for depression was finance. Although the United States went from a net debtor to the world's largest creditor, war debts and reparations were continuing irritant to the international economy in the twenties (Mcelvaine, 2004). The United States was considered banker or creditor-in-chief, which was the role of Great Britain previously, but they were not prepared for it and the leaders were wanting more exported than imported and this was incompatible with America's assumption of the position of the world's leading lender, because the other countries would have to sellmore to the United States than they purchased in order for them to repay the debt they owed the United States creditors (Mcelvaine, 2004). The stock market crash was not the cause of the Great Depression, but it did contribute to it.

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During the Great Depression many people lived in poverty, more than 20% of the people were unemployed, but President Roosevelt implemented programs to help Americans prosper. The Great Depression is when the America’s economy had fallen to its lowest point. Many people lost their money and it’s when poverty hit rock bottom. The New Deal was necessary because even though it didn 't end the Great Depression it helped lowered unemployment, secure their money, and helped the economy prosper. In its attempt to end the Great Depression, the New Deal had many successes and failures    

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