Two major causes of the Great Depression that hit the US in 1929 included the desperate situation of the nation’s agricultural sector coupled with the uneven distribution of wealth. American farmers did not experience the Roaring Twenties like the rest of the population. The First World War saw a dramatic increase in food production to supply the front lines. To address this demand, many farmers were forced to go into debt by mechanizing their farms. After the war, however, the increased capacity for production became untenable. The US did not require excessive production; excessive productivity became a hindrance.
With the added debt accumulated from earlier and rising competition on the domestic market, farmers were teetering on the edge of bankruptcy. The droughts that hit the US during the 1920s only exacerbated the problem. The issue of uneven distribution of wealth made things worse. Over 33% of the money earned was in the hands of the top 5% of income earners. They could not spend so much money on food even if they wanted to. The result was a severe lack of demand coupled with an overabundance of supply.
Some of the New Deal policies targeted these specific issues. New tariffs established by the National Recovery Administration (NRA) offered minimum prices on goods. At the same time, limitations were placed on how much could be produced. These measures helped prevent overproduction in the agricultural sector. Increased taxation of the rich combined with expanding government spending allowed channeling money from the 5% and back into the 95%, increasing the buying capacity of the masses and enabling them to support businesses through their purchasing power. These policies, though criticized, allowed to thwart the crisis and stabilize the situation.