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The Great Depression Was a Global Economic Crisis That Started in 1929

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The Great Depression Was a Global Economic Crisis That Started in 1929 The Great Depression was a global economic crisis that started in 1929. The crisis devastated the economies of many nations and led to a period of financial hardship for millions of people. In the history of the United States, no other depression had had such a devastating impact on U.S. society. During the 12 years of the depression, one-quarter of the work force was unemployed, 5,500 banks closed, and 32,000 businesses went bankrupt. Although the crash of the New York Stock Exchange on October 29, 1929 was a symptom rather than a cause of the depression, it has been blamed as the catalyst. The depression in fact resulted from an overextension of credit and spending in the 1920s. Nonetheless, the stock market crash dramatically shook public confidence in the U.S. economy. The crash also brought an end to the loans that the United States had extended to European countries, which were still recovering from World War I . Europe slipped further into decline and lost any economic gains made in the 10 years since the end of the war. The economies of many Latin American and Asian countries, organized around the export of primary products to the industrial markets of the North Atlantic world, quickly collapsed in response to the loss of their markets. The global crisis was exacerbated by the tendency of most nations to erect tariff barriers in an attempt to protect domestic economies. As international trade ground to a halt, there was no way to alleviate the situation. The Great Depression produced political crises in many of the nations that were hardest hit. In Latin America, for example, several governments fell between 1929 and 1931; democracies were replaced by authoritarian regimes, and dictatorships were overthrown by democratic forces. In Europe, the hardships of the depression inspired a variety of extremist political groups. The desperate economic situation of the German Weimar Republic was an important condition for the rise of fascism in the later 1930s. In the United States, threats to the stability of the U.S. government and economy were dispelled by the " New Deal " programs devised by the administration of President Franklin D. Roosevelt . The New Deal represents the response of President Franklin D. Roosevelt's administration to the Great Depression that gripped the nation from 1929 to 1941. In accepting the Democratic nomination for president in 1932, Roosevelt proposed a "new deal for the American people," a promissory phrase that described a wide array of bold policies and programs. Roosevelt himself maintained that the New Deal would be an experiment that might indeed meet with failure, but that it was better for the country if the government tried to bring some relief and failed, than for it never to try at all. The New Deal bolstered the banking system, stabilized the stock market , put many unemployed people to work, assisted those unable to find work or incapable of working, fought poverty, and instituted an old-age insurance system. It brought tremendous controversy as well, particularly regarding the expansiveness of the federal government's role in American society. While the avowed goal of ending the depression was not achieved (economic mobilization for World War II accomplished that end), the New Deal decisively determined the domestic economic and political contours of American society for the remainder of the 20th century. In the throes of the country's worst economic depression, Roosevelt used the legislative leverage gained by the 1932 electoral victories of Democrats, who captured both the White House and substantial majorities in Congress , to launch an astonishing number of bills during a specially convened session of Congress termed the First Hundred Days from March 9 to June 16, 1933. The legislation passed during the Hundred Days revolved around three major issues that Roosevelt deemed crucial to stabilizing the country: shoring up the failing banking system; assisting ailing farmers across the country to produce more food and ensure it reached consumer markets; and getting as many Americans back to work as possible. Toward this end, Congress passed a series of innovative laws that extended federal influence into unprecedented areas of American life. To restore confidence in American banks and financial institutions, Congress passed the Emergency Banking Relief Act (March 9), the Economy Act (March 20), the Federal Securities Act (May 27), the Gold Repeal Joint Resolution (June 5), and the Banking Act (June 16), the latter of which created the Federal Deposit Insurance Corporation (FDIC) to insure depositors' accounts, thereby lowering the risk of runs on individual banks and general bank panics. To aid farmers, Congress enacted the Agricultural Adjustment Act (May 12), the Farm Credit Act (June 16), and the Emergency Railroad Transportation Act (June 16). The most important of these acts was the Agricultural Adjustment Act, which subsidized farmers who curtailed production toward increasing prices and decreasing the volatility of the market. Congress also undertook the massive Tennessee Valley Authority project (May 18), which not only promised to create a huge power source for much of the Southeast, but also offered flood control for thousands of farmers in the Mississippi River Valley. In an effort to reduce the overwhelming unemployment rate in the country, Congress passed the Civilian Conservation Corps Reforestation Relief Act (March 31), the Federal Emergency Relief Act (May 12), the National Employment System Act (June 6), and most important, the National Industrial Recovery Act (NIRA) (June 16). The latter of these bills marked a monumental change in the federal government's role in the economy. Its many provisions established both the National Recovery Administration (for setting standards for production, prices, and wages, as well as provisions protecting labor that included specifications regarding maximum hours, minimum wages, safe working conditions, and the right of collective bargaining ) and the Public Works Administration , the first national peacetime effort at job creation, employing workers to reconstruct the nation's infrastructure of highways, dams, airports, low-cost housing, and so forth. While incomplete, this list reveals the breadth and depth of New Deal programs, many of which were from blueprints of the so-called brain trust that advised the president. This diverse group of academics often assumed leading roles in the agencies of their design. In tandem with Roosevelt's pragmatic political temperament, these public intellectuals made certain the apparent hodgepodge of New Deal programs would not take on any one ideological hue. While any one group of constituents may have taken offense at a part of a program or policy, there was plenty in the New Deal that was sufficiently redolent of vision and purpose to mobilize the vast majority of Americans behind successive Roosevelt administrations. Although the most dramatic congressional action came during the First Hundred Days, New Deal policies continued to be enacted on a fairly continuous basis over the next several years. For example, the Securities Exchange Act of 1934 supplemented legislation from the previous year, establishing the Securities Exchange Commission to further counter deception, manipulation, and fraud in the buying and selling of stocks, bonds, and other securities. While such measures significantly fortified the fragile financial system, progress on the broader front for the relief of suffering and improved economic welfare was far more uneven and sporadic. To be sure, Roosevelt did succeed in improving the general mood and modest expectations of the citizenry— no small achievement given the tenacity of the economic depression. However, the overall financial picture of both the country as a whole and individual citizens remained bleak. Nevertheless, despite some conservative criticism of the New Deal and its expanded vision of government involvement in American life, most of the public enthusiastically supported Roosevelt's programs, particularly as his reassuring fireside chats , a series of radio broadcasts to the public beginning on March 12, 1933, reinforced public support for his policies. However, the New Deal suffered a series of setbacks from within the federal government that threatened to dismantle much of Roosevelt's program. The U.S. Supreme Court was deeply involved in determining the structure, limits, and fate of the New Deal agenda. At first, it appeared the Court would accept New Deal acts and policies, along with state regulatory actions in concert with the spirit of those initiatives, as seen in its ruling in Home Building and Loan Association v. Blaisdell (1934) and Nebbia v. New York (1934) when it supported some New Deal legislation. However, the Court's judicial philosophy had been shaped in a cultural milieu of laissez-faire economic doctrine as taught in the classical school of economics, which championed free-market ideology and employers' rights over those of organized labor . On May 27, 1935, a day that Roosevelt and his supporters later labeled Black Monday, the Supreme Court declared NIRA unconstitutional in Schechter Poultry Corp. v. United States (1935) . Furthermore, in Humphrey's Executor v. United States (1935) , the Court denied the president the power to replace members of independent regulatory agencies, a crucial executive function to ensuring the success of New Deal programs as Roosevelt decreed. The following year, in United States v. Butler (1936) , the Court voided the Agricultural Adjustment Act, and in Carter v. Carter Coal Co. (1936) , the Court made clear its constricted view of the interstate commerce clause of the Constitution , rejecting Roosevelt's contention that the clause justified such high levels of federal involvement, the constitutional thesis on which the entire New Deal program was based. The Court's ruling on such essential components of the New Deal forced Roosevelt and his supporters to revise much of the legislation passed during the First Hundred Days during another flurry of congressional activity known as the Second New Deal, a period lasting approximately from the spring of 1935 to the middle of 1936.
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