The Great Depression was among the most devastating events, which affected and severely hindered the US economy. It is important to note that Americans faced a wide range of issues, which included unemployment, homelessness, the collapse of international trade, deflation, economic output shrinkage, the banking system failure, stock market failure, and the loss of faith in capitalism (Amadeo). For example, it is stated that during the Great Depression, unemployment reached 25%, and despite the housing prices plummeting, homelessness was at its highest (Amadeo). In addition, the GDP of the United States was reduced by half, and international trade declined by 67% (Amadeo). In other words, many financial and economic elements of the country and its citizens were heavily hit by the Depression.
The government under the Roosevelt administration provided solutions in the form of legislation with the goal of stimulating recovery, creating more jobs, and stabilizing agricultural and industrial sectors (History.com Editors). The Securities and Exchange Commission or SEC was established to regulate the stock market, and the Federal Deposit Insurance Corporation or FDIC was put in place to protect accounts of deposits (History.com Editors). The New Deal was the cornerstone of the government’s solution, which included major infrastructural projects, such as the Tennessee Valley Authority or TVA, and employment programs, such as the Works Progress Administration WPA (History.com Editors). In addition, the Social Security Act was implemented to provide social security for the unemployed, elderly, and people with disabilities (History.com Editors).
It is important to note that the New Deal was effective at catalyzing the overall recovery of the nation from the Great Depression due to its aggressiveness and promptness. However, it still had major flaws, and it is stated that “the New Deal was never a coherent, interconnected effort to deal with the various dimensions of the Depression in a systematic way” (Winkler 1).
References
Amadeo, Kimberly. “The 9 Principal Effects of the Great Depression.” The Balance. n.d.
History.com Editors. “Great Depression History.” History. n.d.
Winkler, Allan M. “The New Deal: Accomplishments and Failures.” U.S. Senate Committee on Banking, Housing, and Urban Affairs. n.d.