Great depression when was it

The Fed failed to do so with a cash injection between and Instead, it watched the money supply collapse and let thousands of banks fail. At the time, banking laws made it very difficult for institutions to grow and diversify enough to survive a massive withdrawal of deposits or run on the bank.

While difficult to understand, the Fed's harsh reaction may have been the result of its fear that bailing out careless banks would only encourage fiscal irresponsibility in the future. Some historians argue that the Fed created the conditions that caused the economy to overheat and then exacerbated an already dire economic situation. Herbert Hoover took action after the crash occurred even though he's often characterized as a "do-nothing" president.

Between and , he implemented:. Hoover was mainly concerned with the fact that wages would be cut following the economic downturn. He reasoned that prices needed to stay high to ensure high paychecks in all industries.

To keep prices high, consumers would need to pay more. But the public was burned badly in the crash, leaving many people without the resources to spend lavishly on goods and services. Nor could companies count on overseas trade , as foreign nations were not willing to buy overpriced American goods any more than Americans were.

Many of his and Congress' other post-crash interventions, such as wage, labor, trade, and price controls, damaged the economy's ability to adjust and reallocate resources. This bleak reality forced Hoover to use legislation to prop up prices and hence wages by choking out cheaper foreign competition. Following the tradition of protectionists , and against the protests of more than 1, of the nation's economists, Hoover signed into law the Smoot-Hawley Tariff Act of The act was initially a way to protect agriculture but swelled into a multi-industry tariff , imposing huge duties on more than foreign products.

Not surprisingly, economic conditions worsened worldwide. Hoover's desire to maintain jobs and individual and corporate income levels was understandable. However, he encouraged businesses to raise wages, avoid layoffs , and keep prices high at a time when they naturally should have fallen.

Unable to sustain these artificial levels, and with global trade effectively cut off, the U. President Franklin Roosevelt promised massive change when he was voted-in in The New Deal he initiated was an innovative, unprecedented series of domestic programs and acts designed to bolster American business, reduce unemployment, and protect the public.

Loosely based on Keynesian economics , it was based on the fact that the government could and should stimulate the economy. The New Deal set lofty goals to create and maintain the national infrastructure , full employment, and healthy wages. The government set about achieving these goals through price, wage, and even production controls. Some economists claim that Roosevelt continued many of Hoover's interventions, just on a larger scale.

He kept in place a rigid focus on price supports and minimum wages and removed the country from the gold standard , forbidding individuals to hoard gold coins and bullion. He banned monopolistic business practices and instituted dozens of new public works programs and other job-creation agencies. The Roosevelt administration paid farmers and ranchers to stop or cut back on production.

One of the most heartbreaking conundrums of the period was the destruction of excess crops, despite the need for thousands of Americans to access affordable food. Federal taxes tripled between and to pay for these initiatives as well as new programs such as Social Security. These increases included hikes in excise taxes, personal income taxes, inheritance taxes, corporate income taxes, and an excess profits tax.

The New Deal led to measurable results, such as financial system reform and stabilization, boosting public confidence. Roosevelt declared a bank holiday for an entire week in March to prevent institutional collapse due to panicked withdrawals.

This was followed by a construction program for a network of dams, bridges, tunnels, and roads. These projects opened up federal work programs, employing thousands of people. Although the economy showed some recovery, the rebound was far too weak for the New Deal's policies to be unequivocally deemed successful in pulling America out of the Great Depression.

Historians and economists disagree on the reason:. A study by two economists at the University of California, Los Angeles estimated that the New Deal extended the Great Depression by at least seven years. But it is possible that the relatively quick recovery, which was characteristic of other post-depression recoveries, may not have occurred as rapidly post That's because it was the first time the general public not just the Wall Street elite lost large amounts in the stock market.

American economic historian Robert Higgs argued that Roosevelt's new rules and regulations came so fast and were so revolutionary that businesses became afraid to hire or invest. Philip Harvey, a professor of law and economics at Rutgers University, suggested that Roosevelt was more interested in addressing social welfare concerns than creating a Keynesian-style macroeconomic stimulus package.

Social Security policies enacted by the New Deal created programs for unemployment, disability insurance, old-age, and widows' benefits. The Great Depression appeared to end suddenly around to That's if we look at employment and GDP figures.

The unemployment rate fell from eight million in to just over one million in However, more than 16 million Americans were conscripted to fight in the Armed Services. In the private sector , the real unemployment rate grew during the war. The standard of living declined due to wartime shortages caused by rationing , and taxes rose dramatically to fund the war effort. Although the notion that the war ended the Great Depression is a broken window fallacy , the conflict did put the United States on the road to recovery.

The war opened international trading channels and reversed price and wage controls. Government demand opened up for inexpensive products, and the demand created a massive fiscal stimulus. The stock market broke into a bull run in a few short years. The Great Depression was the result of an unlucky combination of factors, including a flip-flopping Fed, protectionist tariffs, and inconsistently applied government interventionist efforts.

This period could have been shortened or even avoided by a change in any one of these factors. While the debate continues as to whether the interventions were appropriate, many of the reforms from the New Deal, such as Social Security, unemployment insurance, and agricultural subsidies , exist to this day.

The assumption that the federal government should act in times of national economic crisis is now strongly supported. This legacy is one of the reasons the Great Depression is considered one of the seminal events in modern American history. It's hard to pinpoint exactly what specific factor caused the Great Depression. Industry was badly shaken by the Depression. Factories closed; mills and mines were abandoned; fortunes were lost.

Business and labor alike were both in serious trouble. Unable to help themselves the American people looked to the federal government. Roosevelt as their president in after a campaign that promised activism and "bold persistent experimentation.

This group of men was known as the "Brains Trust. Within one hundred days the President, his advisors and the U. Congress passed into law a package of legislation designed to help lift the troubled nation out of the Depression. Roosevelt's program was called the "New Deal. This new relationship included the creation of several new federal agencies, called "alphabet agencies. Later on came the creation of the Social Security System, unemployment insurance and more agencies and programs designed to help Americans during times of economic hardship.

Under President Roosevelt the federal government took on many new responsibilities for the welfare of the people. The New Deal marked a new relationship between the people and the federal government, which had never existed to such a degree before. Although the New Deal was criticized by many both in and out of government, and seriously challenged by the U.

Supreme Court, it received the overwhelming support of the people. Franklin D. Roosevelt was the only president in U. Despite all the President's efforts and the courage of the American people, the Depression hung on until , when America's involvement in the Second World War resulted in the drafting of young men into military service, and the creation of millions of jobs in defense and war industries. The Great Depression tested the fabric of American life as it has seldom been before or since.

It caused Americans to doubt their abilities and their values. It caused them to despair. The administration quickly developed alternatives, including the National Labor Relations Act known as the Wagner Act , which offered a clearer path to unionization.

Read: The Roosevelt experiment. Indeed, disagreements rent the Roosevelt White House. By the late s, the Keynesians had won out. R oosevelt was also remarkable for the manner in which he successfully disarmed most of his political opponents.

It may be tempting today—with our stalemated politics, deeply divided electorate, and inflammatory media—to imagine that FDR, who won by landslides in and and by a comfortable margin even when seeking an unprecedented third term in , enjoyed the luxury of a national consensus. Nothing could be further from the truth. Read: Thousands of Americans have become socialists since March.

On the left, Roosevelt faced small but effectively organized communist and socialist groups, as well as miscellaneous third parties like John Dewey and Paul H. Much more threatening was Huey Long of Louisiana. Long reached millions through a national network of clubs and his own radio broadcasts. Roosevelt responded to these challenges from the right and the left by justifying the New Deal in uncontroversial, almost nonpartisan terms. And not to be outdone by Father Coughlin or Long, Roosevelt became a master himself of the radio, brilliantly using his many fireside chats to establish an intimate relationship with the American people.

R oosevelt also learned that to lead, he needed to listen. The social and political changes of the New Deal were built by mobilizing ordinary Americans as Democratic Party voters and rank-and-file union members. The New Deal was no top-down revolution. Democratic politicians as well as union organizers quickly discovered that they needed to focus on the real problems people faced, and to respond to their preferences. Before the New Deal, many working people lived political lives circumscribed by their local party, whether Democrat or Republican.

First- or second-generation immigrants were loyal partisans, if they even voted at all. Read: The conservative case for unions.

Within industrial workplaces, unions—to the extent they existed in the s—were made up of elite craft workers, mostly white and native-born, who sought to limit the opportunity and mobility of the more numerous, and more vulnerable, nonunion workers.

Labor organizers suffered a series of stinging defeats in , after which unions seemed to hold little promise for the less skilled workers who powered the mass-production plants that were making the U.

Fearing reprises of the unionization drives that had followed World War I, some employers mounted paternalistic welfare programs in the s, touting benefits such as paid sick leave and vacations, pensions, stock ownership, group life insurance, and employee representation plans. But companies rarely backed those promises with the level of financial investment required to deliver those benefits to more than a fraction of their workforce.

Workers relied instead on inadequate safety nets provided by their ethnic, racial, and religious communities, which quickly failed under the strain of the Great Depression. By the time Roosevelt won a second presidential term, in , the world had transformed. By addressing the needs of Americans, Roosevelt earned their support. Faced with the enormity of the Great Depression, working-class Americans were voting in record numbers—and they voted for the Democratic president.

Working people also drove a massive effort to unionize industrial laborers across many sectors, coordinated by the newly founded Congress of Industrial Organizations CIO , whose success was facilitated by the Wagner Act.

By , in the manufacturing stronghold of Chicago, one in three industrial workers belonged to a union, whereas 10 years earlier hardly any had. Workers who only a few years before had felt little connection to Washington, D. Through their participation in the Democratic Party and unions, workers helped to ideologically reorient both of these new centers of political gravity. This was particularly evident in the labor movement.

But in the end, despite all the hardships of the Great Depression, few workers bought into the anti-capitalist message. Derek Thompson: The economy is ruined.