Background:

The Great Depression was a severe worldwide economic depression that precedes the
World War II. It started in 1929 and lasted until 1939 or early 1940s. At the time of the
depression, the United States and the world was on a gold standard, which meant that the US
dollar was backed by gold. The Gold Standard is a monetary system in which the standard
economic unit of account is a fixed weight of gold. The gold standard limited the Federal
Reserve's control over monetary policy, which resulted with difficulties in lowering interest rates
as an expansionary policy to stimulate the Great Depression to an end. Since the gold standard
depressed the demand for dollars, interest rates rose. The use of gold standard prolonged the
depression. Before the Great Depression, the United States government held with a laissez faire
policy. This meant that the government allowed industries to be free of state intervention,
especially in restrictions in form of tariffs and government monopolies. This type of government
does not favor the economy.

Causes:
The depression main cause originated in the United States with the stock market crash of
October 29, 1929, also known as Black Tuesday. “Black Thursday,” “Black Monday,” and
“Black Tuesday” are all correct terms to describe this crash because the initial crash occurred
over several days; Tuesday was the most devastating day. The banking system witnessed a
number of "panics," in which depositors rushed to take their money out of banks. This caused the
closure of many banks. Others believe that the cause of the Great Depression is the
overproduction; consumers did not wish to consume all that was produced and the bad distributes
of wealth: those who needed, couldn’t afford; meanwhile the wealthy, only spend a small
proportion. Severe droughts and dust storms experienced during the Great Depression worsened
situations in the United States drying out farmlands and forcing families to leave and bid their
farms. In other words, the weather affected the production, slowing and reducing the amount of
crops; therefore, affected the economy.

Why the stock market crashed:

Through the buying stocks on margin, one could buy stocks without the money to
purchase them. Buying stocks on margin functioned much the same way as buying a car on
credit. Investors' craze over the proposition of profits like this drove the market to absurdly high
levels. By mid 1929 the total of outstanding brokers' loans was over $7 billion. The speculative
boom in the stock market was based upon confidence.

Influences:
The Great Depression soon became worldwide; it spread to almost every country in the
world including Germany, France and China. The Depression advanced Adolf Hitler to power in
Germany in 1933 and fomented political extremism in other countries. This occurred because
many thought a time of reformation and change was needed.

Hoovers failed intent:

President Herbert Hoover started numerous programs, which all failed to end the
downturn in the economy. In June 1930, the Congress approved the Smoot-Hawley Tariff Act,
which raised tariffs on thousands of imported items. The purpose of this Act was to encourage
Americans to buy their own products rather than imported goods. It was supposed to raise money
for the federal government and protect farmers. This act reduced the international trade, which
made the depression even worse.
The New Deal:
After President Hoovers’ time ended, Franklin Delano Roosevelt assumed presidency in
the election of 1932. The attitude of many Americans started changing immediately to one of
hope and prosperity. The plan, established by President Roosevelt, to deal with the Great
Depression was known as the New Deal. This plan had three goals; the recovery from the
depression, relief for its victims and the reform of the economic system. The government took
new responsibilities on providing temporary relief and public works employment. It also
established the social security, which covered pension and unemployment insurance, welfare,
financial regulation and deposit insurance.
Roosevelt’s’ New Deal resulted in recovery and reform, and simultaneously created
millions of jobs. A number of great structures, such as the Empire State Building and the Golden
Gate Bridge, were completed during the Great Depression. The construction of theses structures
provided many jobs to the unemployed. Many agencies were developed in order to reform
specific situations; for example, the Civilian Conservation Corps (CCC), took the needy, young
man off the city streets and put them to work in forests and national parks carving out roads and
hiking trails, cleaning beaches, and clearing camping areas. The agencies established, all had the
same goal towards recovery.
The bank holiday marked the beginning of the Hundred Days; 100 days dedicated to
recovery and reformation. During the first hundred days in office, Congress passed fifteen major
laws. They dedicated to built or repaired thousands of roads, hospitals, schools, airports and
playgrounds. Some believed that the programs would make people too dependent on the
government; however, others feared the programs would make the government too powerful, but
most citizens just found it a success.
The New Deal did little for minorities because the Social Security didn't provide for
agricultural workers or domestic employees; the two most common occupations for African
Americans. African Americans were only permitted in segregated units. The New Deal did not
end discrimination, but it began to move toward that goal.

Economic model adopted:

The Keynesian economic ideal served as the economic model used during the Great
Depression. Keynesian economics supports a mixed economy, based predominantly in a private
sector, but with a large role of government and public sector. A private sector is a part of the
economy, which is run for private profit and is not controlled by the state. Keynesian economics
states and argues that private sector decisions sometimes lead to inefficient economic outcomes;
therefore supports active policy by the public sector, including monetary policy actions by the
central bank and fiscal policy actions by the government. The result is to stabilize and take
control over business fluctuations that will occur around long-term growth trends.

General Effects:
During the Great Depression many Americans blamed scientists and engineers for
focusing on laborsaving devices that contributed to unemployment. The ideal of {unemployment
caused more unemployment}, was adapted by historians, to describe the situation of the rising of
unemployment. Construction was halted until President Roosevelt was elected. Personal income,
tax revenue, international trade declined and profits and prices dropped. The majority of
countries, including the United States, set up relief programs and went under political changes;
some even changed all the principles of their governments.
The Great Depression has been the subject of much writing. Authors have opted to
evaluate the era that caused financial, emotional and physical trauma. Suicide rates increased and
bread lines became the symbol. Education also became affected by the Great Depression causing
thousands of schools to operate on reduced hours or were eventually closed down
Effect on individuals:
The incidence of mental health problems and family violence rose. Severe malnutrition
affected many. Many couples delayed marriage, and divorce rates and birth rates dropped. Some
men also abandoned their families, leaving them with absolutely nothing.

Effects on gender and race:

During that decade, men were preferred over women, for jobs. Married women were
often the first to be laid off; ironically, unemployment rates among women were lower than men
during the 1930s, since the labor market in which women participated of were less affected. The
United States during the 1930s was also racist. The unemployment, among blacks, was much
higher than among whites. Many African American were laid off to make room for white
workers.

The end:
Many economic historians believe that the Great Depression ended with the advent of
World War II. Many economists believe that government spending on the war caused and
accelerated recovery from the Great Depression. Others just thought that war helped reducing
unemployment. America's late entry into the war in 1941, eliminated the last effects from the
Great Depression and brought the unemployment rate down. The country didn’t fully recover
until 1941, when munitions and ammunition factories grew and geared up for World War II.
These factories opened opportunities for women, and unemployed.
References:

Great Depression. (n.d) In Concise Encyclopedia of Economics online. Retrieved from

http://www.econlib.org/library/CEE.html

Black, A. & Hopkins, J. (2003). “The Great Depression." In Teaching

Eleanor Roosevelt (Ed.), The Eleanor Roosevelt papers. Retrieved from

http://www.nps.gov/archive/elro/glossary/great-depression.htm