The Great Depression how it affect

us then and now

Austin Dauzat
Senior Division
Paper
The Great Depression was a horrible time for America. It was a time when

unemployment reached record highs, and the US economy was at its lowest point ever.
There were two presidents during the Great Depression. They were Herbert Hoover and
Franklin D. Roosevelt. Both of these presidents had a very different approach when it
came to fixing the economy. Hoover took the approach of laissez faire or let the
economy do what it will. While Roosevelt took a more interventionist approach that
many people at the time termed as the New Deal.
The Great Depression started in 1929 when the stock market crashed. The crash
was over several days, but the worst day was October 19, nicknamed Black Tuesday. On
this faithful day the stock market crashed and the market lost 9 billion dollars in one day.
Overall the market lost over 30 billion in 1929. This was almost 10 times the federal
budget at that time. Researchers arent sure what caused this great collapse, but some of
them think its because more people were investing and causing stock prices to artificially
inflate. Banks also allowed Wall Street investors to use these same stocks as collateral to
buy more stocks, but when the stock market crashed the investors were not able to pay
back their loans, and the banks were left with worthless collateral.
President Hoovers plan of action to help the economy get back on track was
basically to do nothing. Hoover believed in laissez faire or that the government should
not get involved in matters of the economy. He thought that the economy would just
eventually fix itself. He ignored many a call from congress to fund projects that might
help reduce unemployment. He thought that these projects were a good idea, but that it
was the state and local governments job to pay for them. He believed that it was the
states job to fix its own economy and not the federal governments. He was in favor of
the government monitoring and encouraging it a little, but not directly intervening in the
economy. Needless to say the economy worsened even more.
In the presidential campaign of 1932 the former presidents, Herbert Hoover, and
Franklin D. Roosevelt were running against each other. Many people were unhappy about
how Hoover did nothing to help lessen the Great Depression during his time in office, so
Roosevelt won easily. In his speeches he advertised his New Deal that he would get
congress to pass. This he hoped would fix the economy and get it back on track. The
economy got so bad that people started setting up tent cities, because so many people
were out of work and homeless. People named these little settlements Hoovervilles to

spite Hoover, because he had done nothing to fix the economy.

Roosevelt did not have the same commitment to laissez faire as Hoover. During
his time in office Roosevelt set out to do a lot of different things. He wanted to decrease
unemployment, boost the economy, reform banking, stabilize industrial and agriculture
production, and he did all of this within the first hundred days in office. He accomplished
all of this by getting Congress to pass what was then labeled the New Deal. This New
Deal of Roosevelts included many programs which he hoped would get the economy
back on track. It also included some programs such as the Agriculture Adjustment Act
that were very radical at the time and some of them were even declared as
unconstitutional by the supreme court.
Some of the programs within Roosevelts New Deal included loaning money to
farms and businesses. He also put into effect many committees such as the National
Industry Act or NIRA which helped regulate wages and prices. One of the main ways
Roosevelt helped the economy by funding the building of roads and other such
infrastructure which not only helped improve the quality of life, but also it put to work
millions of unemployed workers. Roosevelt put even more people to work by employing
them to plant trees and clean up beaches. He also instituted programs which helped
prevent the same collapse that caused the Great Depression. These programs included
SEC committee which was given the power to regulate stock buying on the margin and
required full disclosure of stock purchases. This was implemented in the hope of putting
an end to the stocks becoming so artificially inflated that when they were corrected to
their real value it wouldnt cause the whole stock market to crash. Another thing the
Roosevelt administration implemented was the Social Security Act.
The Social Security Act is still in effect today. It is now commonly just referred to
as Social Security. Social Security is actually multiple programs aimed to help people. It
was implanted so people who had an industrial accident or some other disability would
still be able to pay their bills at the end of the month. This program was also used so that
unemployed workers and senior citizens would be able to have a source of income. Social
Security was a major break from American tradition at the time because up till then it had
been all about reaping what you sow. However, with the implementation of Social
Security people, who didnt work got to reap a little too. Social Security has changed

throughout the years, mostly by the government continuing to enable more and more
people to qualify for it, but it has also changed by the government having to tax citizens
greater amounts to be able to fund the program.
Throughout Roosevelts time as president while he was trying to enact all these
reforms to the U.S.s economy, he was almost constantly butting heads with the Supreme
Court. Many of the things he was trying to enact were very controversial at the time and
actually some of his programs didnt even get passed because the Supreme Court labeled
it as unconstitutional. To get around this Roosevelt even tried to get Congress to put more
judges on the supreme court so he could get more of his legislation through. Congress
rejected his proposal.
We never got to see if any of these programs that Roosevelt implemented would
have worked. The thing that really got us out of the Great Depression was World War 2
and Hitlers invasion of Germany. This brought us out of the Great Depression because it
put to work millions of workers and put factories into top gear making war supplies for
the military. This was ultimately what brought us out of the Great Depression.
Researchers arent exactly sure when the Great Depression ended. Its really just a matter
of opinion. It took the stock market till 1954 to go back to pre-Depression levels.
Many analysts are of mixed opinions of whether or not Roosevelts New Deal
really helped the Great Depression or perhaps even made it worse. Some people think
this way, because Roosevelt spent millions upon billions of dollars on his programs and
many of them imposed regulations on businesses and got the federal government
involved in the economy. Many of them think though that they might have eventually led
us out of the Great Depression, but in a lot slower manner than what actually happened
because of World War 2. It really depends on your personal beliefs and whether or not
you believe federal intervention really in fact does help our economy.
Many of Roosevelts New Deal Programs are still even controversial today. If you
really think about it, the New Deal Programs are what started the government having a
larger hand in the economy. Like the Social Security Act and welfare and dozens upon
dozens of federal regulations that been put in place over the years. It seems to stems from
Roosevelt and him trying to get the government involved with the economy to try to fix
it. Its almost a follow the leader kind of effect. Since the last president intervened in the

economy a little the next presidents administration doesnt feel as bad to mess with it a
little more.
In conclusion, the Great Depression was a time of great change. Some of the most
controversial policies like social security were implanted during this period. If the Great
Depression had never happened banking would almost be unrecognizable and so would
the stock market. The Great Depression started in 1929 when the stock market began to
crash, and analysts arent sure exactly when in ended. It lasted approximately 15 years,
and was accompanied by an unemployment rate of 20 percent. We had two different
presidents during this time with two very different approaches. One of the presidents was
Hoover who took a laissez faire approach to the economy, but it only got worse. He was
the promptly voted out of office in the next presidential election, and president Roosevelt
was voted in. Roosevelt took a very different approach to the economy by intervening
directly in the economy. In the first hundred days he was in office he reformed almost the
whole United States economy and banking system with his New Deal. He then continued
to implement different programs to help the economy and his citizens like Social
Security. We never did get to see if any of these programs really did work though. What
ultimately pulled us out of the Great Depression was World War 2
because it employed millions of workers.