The Great Depression
The Great Depression was a period of time when United States, as well as the rest of the world, was in pure economic chaos. In the United States, this started on October 29th, 1929, (otherwise know as Black Tuesday because of the huge stock market crash that happened), and it had lasting effects up until World War II, which started in about 1940. During this time, unemployment rates were skyrocketing all over the world. "Unemployment in the U.S. rose to 25%, and in some countries rose as high as 33%"(Domhoff) A person wouldn't have to be a math wizard to figure out that 25% means that 1 in every 4 people were out of work!
Causes
There are many things that have been linked with the beginning of the Great Depression. The first of which was the massive amount of national debt leftover from World War I. One of the facts of going to war is that it is probably one of the most expensive endeavors that a country can pursue. The cost of paying all of the soldiers there commission as well as paying for transportation and equipment really adds up in the end. That is why wars almost always lead to a recession or a depression after they are over. It sometimes happens when they are in the thick of the war as well. Th U.S. of the early 2000's proves this point because after they declared war on Iraq after 9/11, they went into an economic slide because of how expensive fighting long, ongoing wars is. There was also unbalanced richness because the "...richest on percent of Americans owned over a third of all American assets. Such wealth concentrated in the hands of few limits economic growth" (Domhoff). There was also a big problem with banks because they did not use good discretion when they were giving out loans to people who applied for them. Unfortunately, a lot of these people who applied for loans took the money and threw it right back into the stock market, hoping to get rich off of the stock. The money that the bank lent these people was not backed up or anything, so when times got tough and people started to panic, they were without the money they thought they had.
Attempts at Recovery
Feeling lots of pressure from the population, FDR proposed what would later be called the New Deal. This was a series of different acts designed to combat different aspects of the depression. He formed the Civilian Conservation Corps (CCC), which was an unemployment relief effort designed to find the young men of the country ways to get jobs. They put forward several initiatives to try and stimulate the unemployment problem. "Examples of some these are: Road construction, reforestation, national park improvements, and flood control" (Out of Many) . They set up work camps for these projects and provided room and board for the youth and also provided them with 30 dollars each month, which usually went home to their families. By the time the program was dissolved in 1942, there had been about 1,500 camps, with about 2.5 million youth who had worked there. These camps taught the young people to work and set up a very hardworking and driven generation of people. During this "Hundred Days" when all of these acts were passed, FDR also set up more groups to try and stimulate the industry and economy. On of the most controversial was the Tennessee Valley Authority (TVA), which built dams and power-plants and made fertilizer for farmers so that they would not have to pay full market price for it. Then they came up with the Industrial Recovery Act, which was the "closest attempt at the time for a systematic economic recovery." (Out of Many) However, throughout all of this "good" stuff that was going on, there were still a lot of people who thought that Roosevelt was not making good choices by creating all of these "stimulus packages", if you will. Those close to him were worried that he might be losing electoral support, so he decided to come up with another hundred days plan. One that everyone in the population would like so that he could gain back his popularity. It was in this Second Hundred Days that the Social Security Act of 1835 was established. This provided pensions for the elderly and also provided the first examples of unemployment insurance. This act was so successful, that it is still around today! After that was the National Labor Relations Act, which, "For the first time... guaranteed the right of American workers to join, or form, independent labor unions, and bargain collectively for improved wages, benefits, and working conditions."(Out of Many) So thus one can see, that even though some of FDR's initially stimulus plans were a little bit bizarre, his calming demeanor and persistence could be seen as one of the main reasons that the U.S. was able to pull out of that Depression, and get back on the path to recovery.
Fig. 10 "FDR for a New Deal" google images, 15 December, 2012
At this point in time, the U.S. dollar was basically worthless because of all the major inflation that began to take over. There is a common misconception among nations that if they are in an economic crisis, they should start printing off more money. This is not the right thing to do because as they start to pump more and more money into the economy that isn't backed by gold or silver on the federal stage, the value is drastically reduced because the only worth it really has is the material that it is made out of, whether id be paper or other material. When this happens, the price of goods skyrockets. Thus one can see the harmful effects of inflation when it is taken out of control.
During the Depression, much of the industry within the U.S. stopped virtually instantly. The construction industry was non-existent, much like it is in the country today in this recession, and the agricultural industry also took a major hit because the price of crops dropped about 60%. this is very significant because crops were a big part of the economy because of the breadbasket states that were located in the interior and the west coast, and when the depression hit they were suddenly unable to sell their crops for the prices they needed to make a decent profit of of that particular lifestyle.
