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The Great Depression

The stock market crash in October of 1929 threw the United States into a decade era known as the Great Depression. The cause of the depression is multi-pronged with bank failures, droughts and unemployment. President Franklin D. Roosevelt introduced The New Deal in order to restore order and economic stability. Government programs and World War II brought the U.S. out of this economic disaster.

The Great Depression is most famously attributed to the stock market crash of 1929. The decrease in consumer spending and the rise in stock prices couldn’t sustain justified future earnings of stock and investors panicked selling mass amounts of stock on October 24, 1929 followed by another mass sell-off five days later on October 29th. This in turn created a lack of consumer confidence and the already slow economy and spending decreased causing factories to slow down, lay off people or close. Those who had debt were unable to pay resulting in mass foreclosures and repossessions, leaving many not only jobless but also homeless.

Farmers were already in trouble due to drought prior to the stock market crash and falling food prices, thus they were forced to leave their crops to rot in the field and join those already in the famous bread and soup lines.

By the fall of 1930, the instability of the economic state of the country further decreased consumer confidence and people began withdrawing money from banks at alarming rates, creating a shortage of cash and putting banks into insolvency status causing them to close their doors and clients to lose their life savings.

With 20% unemployment rate in 1932, the people elected President Franklin D. Roosevelt, FDR, was elected who immediately began implementing government changes to correct the devastating economic course of the country with his infamous New Deal stimulus package and fireside chats.

The New Deal created public works jobs primarily in infrastructure such as building dams, roads and bridges. FDR also created the Federal Deposit Insurance Corporation to rebuild consumer confidence in the banking industry by insuring deposits made to banks. The Social Security Act was also created at this time to provide unemployment insurance.

On December 7, 1941 the United States declared war on Japan after the Pearl Harbor attack. This is considered the end of the Great Depression. The remnants of the Great Depression are still seen today with government agencies designed to protect the citizens such as the Social Security Administration, the FDIC to govern banking and the SEC to govern the stock market. The Great Depression changed government for all generations to come.