A critical factor in explaining the length of the Great Depression was that the economic downturn was global. When the Wall Street crahsh took place in October 1929, it had an immediate impact not just on the United States, but also Britain and the rest of Europe. Global trade and economic output collapsed, causing millions to be thrown out of work. For example, in Germany, which had relied heavily on American loans to rebuild its economy during the 1920s, unemployment skyrocketed and a process of political radicalization began that culminated in the coming to power of Hitler in 1933. The response of many governments only made things worse. Protectionist trade measures were adopted which increased tariff barriers between countries, and accelerated the division of the world economy into trade blocs. The most important example of this was the Smoot-Hawley Tariff Act, signed by President Hoover, which hiked tariffs to an average of 50 percent. This created additional barriers to economic recovery and laid the basis for the conflicts that would later erupt in world War II. The tariff barriers also led to countries around the world abandoning the gold standard and devaluing their currencies, moves which played havoc with the exchange system. Some saw the fundamental cause of the crisis in the nature of the capitalist system, which had created unsustainable levels of social inequality and poverty. During the 1920s, many American banks were poorly regulated and over-extended their operations, while wages failed to keep pace with corporate profits. This led many intellectuals and workers to turn to Marxism or more socially-oriented economic models. It is a matter of one’s own political views whether their arguments should be accepted. But they would have presented the persistence of the Great Depression as capitalism’s failure. Roosevelt’s new deal, largely implemented during his first 100 days in office, not only gave government a much larger role in providing aid to the unemployed and elderly through programs like Social Security. Huge public works programs, like the Tennessee Valley Authority, created jobs for the unemployed, and new regulations increased the power of the federal government in trade and finance. If you compare this to the actions of successive governments, at least prior to Hoover, the difference is stark. Their reaction was generally to reduce spending Further reading: https://www.britannica.com/event/Great-Depression/Political-movements-and-social-change https://www.britannica.com/place/United-States/The-Great-Depression#ref613060
There were several reasons why the Great Depression lasted so long. One reason was the collapse of the stock market, along with the collapse of the banking system. So many people and businesses lost everything when they were unable to get their money from their bank accounts and when their investments became worthless as businesses closed.
Another factor is that there were government regulations that interfered with free market forces. The National Industrial Recovery Act allowed businesses to set codes of production. Minimum wages were set along with a maximum number of hours a person could work. Minimum price levels for products were also established. The price fixing that occurred was generally at higher levels than the free market would have allowed. This reduced the amount of wealth that could be generated. When free market forces aren’t allowed to determine the price of products, fewer goods are produced and sold when prices are above free-market levels.
A third factor was that some of the government programs to deal with Great Depression seemed to be of limited value. The Works Progress Administration created some important jobs, such as infrastructures jobs building roads and bridges, but some jobs went toward building swimming pools and playgrounds. Additionally, the Agricultural Adjustment Act led to higher food prices, which created difficulties for people who already had very little money.
The New Deal altered the relationship between the government and the American people. The American people began to believe that the government should serve as a safety net during times when people are in great distress. People have come to rely on the government for social programs as a result of the Great Depression. One such program created during the Great Depression and that still exists today is the Social Security program. This program is very important to those people who have reached the retirement age at which benefits from Social Security become available.
https://www.forbes.com/2009/04/30/1930s-labor-wages-business-ohanian.html
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