The Great Depression of 1929 had long-term, detrimental effects to the US economy. Homelessness seemed like the new normal, and people lined up by the hundreds to get something to eat. Unemployment skyrocketed 25%, and inversely, the housing market took a major hit. Housing prices dropped around 30%, making houses virtually worthless. There was practically no money fluctuating the US economy, and due to this, our foreign trade took a major hit. Our once flourishing international trade collapsed over 60%, and prices began to plummet. The Great Depression absolutely demolished our markets, and it would take the United States 25 years to recover. Although the Great Depression had many negative effects, and destroyed the nation’s economy, there were some positives that came out of this event.
The positive impacts of this ordeal came mostly in the form of political institutions. One of the most important creations that was a result of the Great Depression is the New Deal. The New Deal programs consisted of installments by President Franklin D. Roosevelt that would ensure a catastrophe like the Great Depression couldn’t happen again. Included in the New Deal were programs such as public works projects, federal regulations, and the reformation of financial systems. Roosevelt’s goal was to bounce back from the Great Depression through the use of Keynesian economics.
This idea was that capitalism would be the best way to save our economy as businesses pay people to work, people earn money from doing their job, and in return, spend their money on things they want. This would cause a surge of money in the federal government, and allow the federal government to fund programs such as the SSA, FSA, HOLC, and many more government funded installments. This flow of money in the US economy would eventually bring the end of the depression. The political institutions that Roosevelt put in place would not only help alleviate the stress of the nation, but would provide safety nets for those who were struggling the most, while still supporting everyone.The Depression eventually ended in 1939 as government drastically increased spending due to the threat and call to action of World War II events. So, although many negatives came from the Great Depression, the political institutions that were created as a result of this drastic event would ultimately benefit the country long term.
One of the books used for my analysis of The Great Depression of 1929, and how it affected government institutions is The Great Depression: America 1929-1941. This book was written by Robert S. McElvaine. He is generally associated with having the most readable studies of the era. Many historians would even say that McElvaine crafted one of the most authoritative accounts of The Great Depression. McElvaine discusses in his book the horrors that The Great Depression brought, and how even the smartest of politicians and economists struggled to try to revive the disassembled and crumpled economy.
In this book, McElvaine doesn’t only address the struggles that accompanied this tragic event, but also how the government and economy were completely reassembled. He talks about how although they were reassembled after the Depression, they were created and morphed into institutions that were suitable for the state of the economy at that time. The reviews on this book are absolutely incredible and many people applaud McElvaine for giving such a focused and detailed account of The Great Depression from start to finish, not just from a certain period onward. Critics respect and condone McElvaine for the parallels that he drew between the roots of the Great Depression and the economic meltdown that followed in the wake of the credit crisis of 2008.
McElvaine tackles The Great Depression in a, what critics call, “bottom-up” approach. Critics and readers of the book said that unlike many authors, McElvaine sprinkles into his text the correspondence from ordinary Americans to the Roosevelts, which many authors leave out. The language used throughout the book is described as rich, evocative, and heartfelt. McElvaine writes the whole book in this style, and infuses the text with a deep sense of melancholy. This book provides me with great historical analysis of what occurred during this terrible tragedy. Not only can I see how it happened, but I can understand the damage this event caused to the economy and governmental institutions, and how the United States handled it.
This book gives me insight into how government institutions were recrafted after the economy, and to what extent Americans were forced to adapt to the different institutions that were put in place. This book leaves out specific institutions, and how they were altered and improved, which could hinder how much myself, and historians, get out if it in that sense. Although most historians would be cognisant that many government institutions were improved, they can’t be certain which ones changed the most, and if that change was positive or negative. Despite the few drawbacks that this book presents, it will be an extremely useful source in the construction of the paper to not only understand how The Great Depression brewed, but what happened after in regards to the positive improvements of government institutions.
One of the most beneficial and long lasting implementations of the New Deal was the Social Security Act. The Social Security Act evolved from a plan commonly known as the Townsend Plan, which was a governmental effort to establish pensions funded by government for the elderly people no longer in the workforce. This plan was lead by Dr. Francis Townsend, who eventually would be given credit for the creation of the SSA. This Act was passed in 1935 by President Franklin D. Roosevelt, as part of the Second New Deal. This act is responsible for laying the groundwork for the welfare system that the United States still uses to this day.
The Social Security Act focuses on three primary groups; those being the elderly, the unemployed, and children. This social welfare net also benefited those with a disability, as they were not able to be productive in the workforce, and in return, couldn’t make a living from work. Due to industrialization and urbanization, the mindset of the country shifted, and ideas of how society and the government should function as one unit became more and more accepted and relevant. With the surge of people in the workforce, and many needing some sort of security reinforcement, the SSA was born.
This Act has been recognized by most Americans in the workforce as the crown jewel of the New Deal. The Social Security Act was intended to establish unemployment insurance as a means of assistance for men and women, who are in working condition, are unemployed. Not only does it provide support for men and women who are without work, but it also greatly supports the elderly who are no longer in any condition to be in the workforce. Monthly payments are sent to elderly people who provided work, and contributed to an insurance fund.
This amount is based off of income, with the minimum monthly payment being $10, and the maximum monthly payment being $85. Secretary of Labor Frances Perkins said this about the Act, “Our social security program will be a vital force working against the recurrence of severe depressions in the future. We can, as the principle of sustained purchasing power in hard times makes itself felt in every shop, store and mill, grow old without being haunted by the spectre of a poverty ridden old age or of being a burden on our children.” This Act originally was designed to prevent the effects that the impoverished face on a daily basis, but eventually transformed into an extremely useful net for the disabled, elderly, and families who have experienced a death.
Aside from the creation of the Social Security Act, the Great Depression also brought the rise of the WPA. The Works Progress Administration was a savior for those affected by the Great Depression, as it was an outlet for work. Many people at this time found it incredibly difficult, if not impossible, to find work. The reason for this was because businesses were still bouncing back from the economic destruction the Great Depression brought, and in turn, didn’t have enough money to hire many workers. This is where the WPA shined. The WPA was a mass employment and infrastructure program put in place by Roosevelt in 1935. This administration was enacted during the bleakest years of the Great Depression, where all hope was lost within the hearts of the American people. The WPA, over its eight year period of being in action, employed roughly 8.5 million Americans to do all different kinds of public work. Some of the work that was provided was helping with building roads and buildings.
The WPA planted 24 million trees, constructed 130 new hospitals, built more than 4,000 new school buildings, laid around 9,000 miles of storm drains, built 29,000 new bridges, built 150 new airfields, paved or repaired 280,000 miles of roads. In terms of getting things done, the WPA was extremely efficient in using a harsh event such as the Great Depression, and turning it into a beneficial program that rebuilt our infrastructure, while also hiring those that needed jobs the most. That being said, the WPA was able to reach such a large audience due to the fact that it required little to no skill for the labor that was being offered. This is why even unskilled women were given a chance to work the jobs, although most of the opportunities were open to men only.
A very well known sociologist stated this about the WPA, ‘The stated goal of public building programs was to end the depression or, at least, alleviate its worst effects,’ sociologist Robert D. Leighninger asserted. ‘Millions of people needed subsistence incomes. Work relief was preferred over public assistance (the dole) because it maintained self-respect, reinforced the work ethic, and kept skills sharp.’ Aside from just supplying jobs for construction, the WPA also sponsored many projects in areas that concerned actors, writers, musicians, and other artists of this nature.
Another political institution that was a result of the tragedy known as the Great Depression was the The Civilian Conservation Corps. This project, also known as the CCC, was a work relief program that provided millions of young men from across the nation with employment on environmental projects. This program in particular was one of the most beneficial programs to the environment, but also in terms of training young men. These young men would never get chance to find a job during this time period, especially due to their age. The CCC gave them an outlet to learn responsibility, and get their feet wet in terms of learning how to contribute in the workforce. This program was considered by many to be one of the most successful of Roosevelt’s New Deal programs.
Members in the CCC were responsible for planting more than three billion trees, and working continuously on parks across the nation. Throughout the nine years that the CCC was in effect, they constructed shelters and public trails in more than 800 parks. The CCC and its members are responsible for helping shape the modern national park systems that millions of Americans enjoy today. The CCC enrolled primarily unskilled young men between the age 18 to 25. On top of that, the CCC also enrolled veterans from World War I, and some 88,000 Native Americans who lived on Indian reservations.
Racial discrimination was extremely prevalent in this field of work, as African American men who worked where in entirely separate camps. Women were strictly prohibited from joining the CCC, as they were seen as unfit for the work that was being done in terms of strenuous labor. The young men who were selected for these projects came from primarily lesser wealthy families, mainly ones that were on assistance from the government. Men were selected, and enlisted in this program for a certain amount of time, the smallest amount being six months.
These workers in the CCC received very small payments of $30 per month. They received this payment for their work alone, as their boarding at camp was completely paid for and funded by government. Another way to teach these young men responsibility was to require them to send money home to their desperate families, and it was no small amount. Every worker was required to send $22 to $25 of their $30 monthly paycheck home to support their families. Some members in the CCC received basic and rudimentary education between their times of work. This was mostly for the illiterate among them, and it is estimated that the education provided in the CCC allowed more than 57,000 illiterate men the opportunity to learn how to write and read.