After enjoying a significant period of consumerism, social reform, and financial prosperity following World War I, the U.S. was faced with the greatest economic crisis of its history, the depression. Spanning throughout the 1930's it was ultimately World War II that pulled the U.S. out of this dismal time, stimulating the economy and encouraging mass government spending. However, many efforts were attempted during the depression, especially the New Deal which was spearheaded by the efforts of FDR (Jones, Wood, Borstelmann, May, Ruiz, and Reviews).
As discussed earlier in the blog, it was an economic downturn, which many argue is part of the natural cycle of capitalism that caused the depression. During this time 14 million people, nearly one quarter of the population, was unemployed (Jones et. al.). Many people, who had never known hunger or poverty before, were faced with the reality that they had no economic means. This was a hard time in the history of the U.S. However, this time also created the idea reinforced the American mentality of "We will overcome" establishing hope where often there should be no hope.
In addition to the hard economic times with regards to the stock market, the mid-west dealt with the hardships of the dust bowl. Brought on by severe draught, the famers who were already struggling in the mid-west faced a land that refused to produce any product and ultimately turned to dust. In today's modern era it is now well known that the dust bowl was a result of harsh over farming practices that devastated the natural ecosystems of that area (Jones et. al.). In response to the land that would no longer produce, many families headed west, creating a giant migration from Oklahoma, Texas, New Mexico, Colorado and Kansas (Jones et. al.). It should be noted that very seldom did these individuals meet with the economic relief that they were in search of at that time.
FDR was elected in 1932. FDR's promise to the people of the U.S. was his "New Deal" which he promoted to usher in an end to the depression. FDR's new deal was a massive plan that included reforms to the banking system and created a program to enable work throughout the country. It should be noted that since his inception as president, every president has since been judged on their accomplishments within the first 100 days, reflective of the achievements that FDR accomplished during his time in office. Multiple acts, such as the Agriculture Readjustment Act had government intervention that helped both the farmer and starving population by providing a means to get funding to producers and product to the hungry (Jones, et al.)
Multiple programs were developed, such as the Civil Works Administration act, which created temporary jobs. The Civilian Conservation Corps was established to dig canals, plant trees, and do other eco-friendly measures (Jones, et al.). The Tennessee Valley Authority (TVA) established jobs through construction of large scale utilities projects which in turn provided cheap electricity to rural areas (Jones, et al.). As outlets of many of these New Deal programs, large construction projects, government operated and owned were undertaken to provide jobs to many who were looking for work.
It was these multiple projects and government interventions that helped pull the American spirit out of the dull drums. These methods helped prevent the U.S. from forming violent fascist regimes that were developing in Europe, which were fueled by the idleness of the world wide depression. Although FDR's tactics did not fully alleviate the strains that the American people were undergoing, it did provide some revitalization and spirit to those who needed it. Ultimately, World War II emerged to pull the U.S. out of financial misery, at about the cost of 2 million soldiers.
Only when the federal government started incurring massive deficit spending at the advent of World War II did the Great Depression end. Its effects on the lives and world views of those who lived through it were permanent. Unfortunately, the lesson learned from it by economists – that an economic downturn is no time for fiscal austerity – may have been forgotten. Nobel Prize-winning economist Paul Krugman recently wrote, “We are now, I fear, in the early stages of a third depression [the first ones having begun in 1873 and 1929]. … And this third depression will be primarily a failure of policy. Around the world … governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.
Works Cited
Krugman, P. “The Third Depression.” The New York Times, June 28, 2010. Retrieved at http://www.nytimes.com/2010/06/28/opinion/28krugman.html.
Jones, Jacqueline, Peter Wood, Thomas Borstelmann, Elaine May, Vicki Ruiz, and Cram101 Reviews. Outlines & Highlights for Created Equal. Longman Pub Group, 2010. Print.