The Great Depression
Macaria Haney 5th period
What was the Great Depression?
During The Great Depression
- Unemployment jumped from less than 3 million in 1929 to 4 million in 1930, 8 million in 1931, and 12 1/2 million in 1932.
- In 1932, a quarter of the nation's families did not have a single employed wage earner. Even those fortunate enough to have jobs suffered drastic pay cuts and reductions in hours.
- Vagrancy shot up as many families were evicted from their homes for nonpayment of rent.
- The Southern Pacific Railroad boasted that it threw 683,000 vagrants off its trains in 1931.
- Free public flophouses and missions in Los Angeles provided beds for 200,000 of the uprooted.
There were multiple causes for the first downturn in 1929. These include the structural weaknesses and specific events that turned it into a major depression and the manner in which the downturn spread from country to country. In relation to the 1929 downturn, historians emphasize structural factors like major bank failures and the stock market crash. In contrast, monetarist economists point to monetary factors such as actions by the US Federal Reserve that contracted the money supply, as well as Britain's decision to return to the gold standard at pre–World War I parities.
Recessions and business cycles are thought to be a normal part of living in a world of inexact balances between supply and demand. What turns a normal recession or 'ordinary' business cycle into a depression is a subject of much debate and concern. Scholars have not agreed on the exact causes and their relative importance. The search for causes is closely connected to the issue of avoiding future depressions. A related question is whether the Great Depression was primarily a failure on the part of free markets or a failure of government efforts to regulate interest rates, curtail widespread bank failures, and control the money supply.
The New Deal
The New Deal was a series of domestic economic programs enacted in the United States between 1933 and 1936. They involved laws passed by Congress as well as presidential executive orders during the first term of President Franklin D. Roosevelt. The programs were in response to the Great Depression, and focused on what historians call the 3 Rs: Relief, Recovery, and Reform. That is Relief for the unemployed and poor; Recovery of the economy to normal levels; and Reform of the financial system to prevent a repeat depression.