Great Depression and the New Deal
After learning about United States Industrialization from Neil Painter book Standing at Armageddon, and reading about the unprecedented economic prosperity in Michael Parrish Anxious Decades, Eric Rauchway in his book The Great Depression and the New Deal discusses the major causes of the Great Depression in the United States and ways the newly elected president Franklin D. Roosevelt intended to fix the economic problem by implementing New Deal Programs. The Great Depression was one of the deepest and longest lasting economic downturn in the history of the United States. It was an immense tragedy that placed millions of Americans out of work. After nearly a decade of prosperity, the United States was thrown into despair on October 29, 1929 when the stock market crashed. During the 1920’s there was an unprecedented amount of industrial growth and many of Americans were able to live comfortably. This era saw new discoveries and inventions in nearly every field of endeavor that became the foundation of a striving business. With the industrial success many people began to invest in the stock market. The Stock Market climbed to exceeding heights allowing the general public to join in for easy profits. When stock prices slumped many investors had to sell their shares forcing sell prices to drop further, leading to the Stock Market Crash of 1929. The Stock Market Crash was one of the major causes that led to the Great Depression. Two months after the original crash in October, stockholders had lost more than forty billion dollars. Even though the stock market began to regain some of its losses, by the end of 1930, it just was not enough and America truly entered what is called the Great Depression. After the Stock Market crashed banks began to fail throughout the 1930’s. During this time bank deposits were uninsured and people simply lost their savings due to the amount of loans that were being given out by the banks. With the Stock Market crash and the failure of the banks, individuals from all classes stopped purchasing items. This led to a reduction in the number of items being produced which led to a reduction in the workforce. The unemployment rate rose which alleviated the economic situation. When Franklin D. Roosevelt took presidency in 1933 during the time of the economic crisis, he persisted on fixing the issues of the economy by implementing a series of economic programs known as the New Deal. Although Roosevelt was not sure of the outcome of the New Deal, he was willing to take a chance if it would help the economic crisis in the United States. The Emergency Banking Relief Act was one of President Franklin D. Roosevelt first major project of the New Deal. The act created a plan that would terminate the services of those banking institutions that was not able to satisfy their clients’ needs any longer while giving a chance for banks that had enough funds to resume and undergo new changes in the organization. In the early twentieth century the banks became an important asset to the United States economy. In the 1920’s, during the great depression the banks begin to fail at an alarming rate. As the economic depression deepened many people became low on funds because too many of the American people were using the new banking system of credit. The banks began to lend out more money than they had and were not being paid back the loans. Because of the bank's shortage of funds, money in customer's accounts were being given away and never seen again. There was an average of more than six hundred banks per year that failed between 1921 and 1929. On March 9, 1933, the Emergency Banking Relief Act was passed. Eric Rauchway stated, “Roosevelt began by rescuing the banks. Two days after taking office he declared the nation’s banks must stop transaction in gold, thus shutting them down, he asked Congress to ratify his actions. (57)” One aspect the act address was allowing president...
Bibliography: Rauchway, Eric. The Great Depression & the New Deal: A Very Short Introduction. Oxford: Oxford UP, 2008.
Please join StudyMode to read the full document