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The Great Depression is one of the deepest and most devastating economic downfalls that rocked the mighty United States in the “roaring twenties.” Though most people view this event as the worst phase in American history, it was among the defining events of the country’s future.
To date, there are many debates about whether the undertaken measures were appropriate. However, one cannot deny that some reforms are still in effect today.
The Great Depression lasted between 1929 and 1941 – the same year the United States of America entered the Second World War. This period was accentuated by numerous economic catastrophes – increased unemployment and homelessness, a stock market crash (Black Tuesday), and banking panics.
Many economists and historians have cited the Great Depression as one of the most destructive economic events of the 20th century. The event had long-term effects, and it took 25 years for the stock markets to recover.
Amidst these utterly harrowing events, some beneficial developments, such as the New Deal programs, helped revive the economy.
The economy was the first to face the brunt, and it shrank by 50% during the initial 5 years of the Depression. Adding to that was the increase in the unemployment rate, which peaked in 1933 (24.9%). Additionally, the country suffered major economic compression for at least four years from 1929 to 1933.
However, the introduction of the New Deal boosted GDP growth the following year. The new development resulted in 17% growth in 1934, and things went well until 1937. But, the Government reduced its spending on the New Deal in 1938, causing the Depression to return.
Things took another turn as the country entered World War II. The New Deal and the war caused the economy to change from a pure free market to a mixed one.
The Great Depression had another colossal impact on politics, which shook the confidence in unrestrained capitalism. Herbert Hoover, who was the President at the onset of the Depression, advocated laissez-faire economics, which failed badly.
And this resulted in people voting for Franklin Roosevelt, who believed that government spending would end the Depression through Keynesian economics. And that’s how The New Deal was introduced, and fortunately, it worked.
However, $5 Trillion in U.S. credit was a major concern for FDR. This resulted in reduced spending, making the Depression return. But, things changed again, with the world gearing up for World War II.
The government started ramping up for the war and the resulting spending ended the Depression. This change in spending led to the false belief that military spending contributes to economic growth.
But, most people forget that military spending is not the best way to create jobs.
The Great Depression also had a significant impact on employment, banking, stock markets, trade, deflation, etc. Another noteworthy development was the construction of some iconic buildings and landmarks by the PWA (The New Deal Public Works Administration).
The Dealey Plaza in Dallas, San Francisco’s Golden Gate Bridge, the Florida Keys Overseas Highway, Hoover Dam, and La Guardia Airport are some of the famous structures created. Additionally, three towns – Greenhills, Greendale, and Greenbelt also came into existence.
Overall, the success of the New Deal built confidence among the public and strengthened their faith in the Federal Government.
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