In 1929, The Great Depression seized America. The country wallowed for four years in
desperation, until a new leader was elected. Franklin Delano Roosevelt came to the presidency in 1933 focused and with a plan like never before. His so called “New Deal” was the innovation of policy at the time, and the public responded in turn. The country seemed to be on the steady process to recovery. The twelve years of desperation from 1929 to 1941 changed the face of America today. While kissing away college scholarships and hours at my government-sponsored after-school job, I had a revelation like a concertgoer at the ’69 Woodstock (minus the LSD): these two defining periods of American history were simultaneously changing my life despite the eighty years difference in that moment. As we continue on our own path to what we hope will repair the shards of our shattered American capitalism, I wondered if my faith in President Obama’s plan was justified. The similarities between the 2009 recovery and the New Deal were immense, and I sought my answer through analyzing Franklin D. Roosevelt’s response to an even greater economic plight. Economists still debate the true success of the New Deal and the resounding impact it had on the country. Franklin D. Roosevelt’s New Deal policies eventually succeeded in rebuilding the American economy to functionality and its legacy is still proving effective in today’s modern economic dilemmas.
In the 1920’s the United States was on the road to recovery. Having survived World War I and now an established international powerhouse, the U.S. economy was becoming a lion in world economics. The American stock market had risen to new heights, and had become a central force in the American economy. However, like a child with sugar and climbing a tree, this proved to be more of a demon than a blessing. An article published in the New York Times on March 24, 1929 described the credit frenzy of the decade:
…the number of brokerage accounts had doubled in the past two years [1927-1929]. . . .
It is quite true that the people who know the least about the stock market have made the most money out of it in the last few months. Fools who rushed in where wise men feared to tread ran up high gains. (Norris)
This article was the doomsday prophecy that soon came true. The stock market suffered through scrapes and scratches in the months th...
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Grant, James. “From Bear to Bull.” Wall Street Journal – Eastern Edition 19 Sept. 2009: W1+. Academic Search Premier. EBSCO. Web. 9 Nov. 2009
Lohr, Steve “Echoes of 1933?.” New York Times Upfront 141.11 (2009): 8. MasterFILE
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Nicholas, Phil, Jr. "THE AGENCY THAT KEPT GOING: THE LATE NEW DEAL SEC AND
SHAREHOLDER DEMOCRACY." Journal of Policy History 16.3 (2004): 212-238.
America: History & Life. EBSCO. Web. 17 Nov. 2009.
Norris, Floyd. "Looking Back at The Crash of 1929." The New York Times 15 Oct. 1999, web edition ed. Web. 17 Nov. 2009. .
Olson, James Stuart. Saving Capitalism: The Reconstruction Finance Corporation and the New Deal, 1933-1940. Princeton, N.J.: Princeton University Press, 1988.
Shlaes, Amity "Deal or No Deal? (Cover story)." Time 173.26 (2009): 38-42. Academic Search Premier. EBSCO. Web. 17 Nov. 2009.
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(2009): 34. MasterFILE Premier. EBSCO. Web. 28 Apr. 2010.
The Great Depression tested America’s political organizations like no other event in United States’ history except the Civil War. The most famous explanations of the period are friendly to Roosevelt and the New Deal and very critical of the Republican presidents of the 1920’s, bankers, and businessmen, whom they blame for the collapse. However, Amity Shlaes in her book, The Forgotten Man: A New History of the Great Depression, contests the received wisdom that the Great Depression occurred because capitalism failed, and that it ended because of Roosevelt’s New Deal. Shlaes, a senior fellow at the Council on Foreign Relations and a syndicated financial columnist, argues that government action between 1929 and 1940 unnecessarily deepened and extended the Great Depression.
Frederick Lewis Allen’s book tells in great detail how the average American would have lived in the 1930’s. He covers everything from fashion to politics and everything in between. He opens with a portrait of American life on September 3, 1929, the day before the first major stock market crash. His telling of the events immediately preceding and following this crash, and the ensuing panic describe a scene which was unimaginable before.
Richard Kinderdall, The New Deal as Watershed: The Recent Literature, The Journal of American History, Vol 54, No.4 March 1968 p.845
The 1920s were a time of leisure and carelessness. The Great War had ended in 1918 and everyone was eager to return to some semblance of normalcy. The end of the war and the horrors and atrocities that it resulted in now faced millions of people. Easily obtainable credit and rapidly rising stock prices prompted many to invest, resulting in big payoffs and newfound wealth for many. However, overproduction and inflated stock prices increased by corrupt industrialists culminat...
"America's Great Depression and Roosevelt's New Deal."DPLA. Digital Public Library of America. Web. 20 Nov 2013. .
Not only were millions of Americans been put out of work due to these manager’s actions, the American financial markets themselves were pushed to the brink of collapse. Despite the fact that the global financial markets, in reality, are not perfectly efficient, there is a corrective mechanism built into the day-to-day trading in the market. When prices are driven down by large sells, either by large investors or a movement in a stock, there are usually new buyers for these stocks at the cheaper price. Managers of...
Cooke, Lorne. "Review: The Great Crash 1929 by John Kenneth Galbraith." The Journal of Finance. 11. no. 1 (1956): 100-101. http://www.jstor.org/stable/2976547 (accessed October 4, 2011).
Because Herbert did not have an immediate and effective plan to deal with the great depression, most Americans turned to Franklin Delanor Roosevelt. Once FDR entered the white house, he came up with the New Deal. As we all know, the New Deal was a policy that in response to the Great Depression. Till today, many scholars believed that the New Deal succeeded in alleviating the economic crisis and helping a lot of people. As the article “The Great Depression, The New Deal, And The Current Crisis” mentioned, “real output and employment grew very strongly between 1933 and 1937, with unemployment fall-ing more than 10 percentage points” (Field 99); “GDP had completely recovered from its collapse during Hoover administration and by 1937 was, in real terms, more than 5 percent above its 1929 peak”(Field 100); “the rise in real wages for those employed across the depression years was certainly consistent with Roosevelt’s efforts to facilitate the growth of unions”(Field 103). Field thought these factors made the New Deal a success. However, if we take a deep look into the fact, the recession, remain high unemployment rate, employment situation and highly cost, unsuccessful program made the New Deal becoming a
Post the era of World War I, of all the countries it was only USA which was in win win situation. Both during and post war times, US economy has seen a boom in their income with massive trade between Europe and Germany. As a result, the 1920’s turned out to be a prosperous decade for Americans and this led to birth of mass investments in stock markets. With increased income after the war, a lot of investors purchased stocks on margins and with US Stock Exchange going manifold from 1921 to 1929, investors earned hefty returns during this time epriod which created a stock market bubble in USA. However, in order to stop increasing prices of Stock, the Federal Reserve raised the interest rate sof loanabel funds which depressed the interest sensitive spending in many industries and as a result a record fall in stocks of these companies were seen and ultimately the stock bubble was finally burst. The fall was so dramatic that stock prices were even below the margins which investors had deposited with their brokers. As a reuslt, not only investor but even the brokerage firms went insolvent. Withing 2 days of 15-16 th October, Dow Jones fell by 33% and the event was referred to Great Crash of 1929. Thus with investors going insolvent, a major shock was seen in American aggregate demand. Consumer Purchase of durable goods and business investment fell sharply after the stock market crash. As a result, businesses experienced stock piling of their inventories and real output fell rapidly in 1929 and throughout 1930 in United States.
“Stock Market Crash of 1929.” Gale Encyclopedia of U.S. Economic History. Ed. Thomas Carson and Mary Bonk. Detroit: Gale, 1999. U.S. History in Context. Web. 25 Feb. 2014.
McElvaine, Robert S. The Depression and New Deal: A History in Documents. New York: Oxford UP, 2000. Print.
The stock market crash of 1929 is the primary event that led to the collapse of stability in the nation and ultimately paved the road to the Great Depression. The crash was a wide range of causes that varied throughout the prosperous times of the 1920’s. There were consumers buying on margin, too much faith in businesses and government, and most felt there were large expansions in the stock market. Because of all these...
F. Scott Fitzgerald delineated the Roaring Twenties in The Great Gatsby as “the parties were bigger. The pace was faster, the shows were broader, the buildings were higher, the morals were looser, and the liquor was cheaper.” It was the era marked by social changes and splendous parties and self-made millionaires. However, unprecedented to Fitzgerald and many of his contemporaries was that said glamourous lifestyle was built on a precarious foundation. When the stock market crashed in 1929, it put a period to the beguiling era and opened Americans to a horrid epoch. Yet, in actuality, the Stock market crash is an inexorable consequence of a time so reckless such as the Roaring Twenties. Some identified causes of the eventual crash are margin buying, overproduction of goods, and banks investing in stocks with depositors’ funds.
New York Times, p. 1. http://www.nytimes.com/2009/09/09/business/economy/09leonhardt.html?_r=1 Lipman, Marc. A. A. Personal Interview. March 21, 2010. Marano, Hara E. (2004).
In early 1928 the Dow Jones Average went from a low of 191 early in the year, to a high of 300 in December of 1928 and peaked at 381 in September of 1929. (1929…) It was anticipated that the increases in earnings and dividends would continue. (1929…) The price to earnings ratings rose from 10 to 12 to 20 and higher for the market’s favorite stocks. (1929…) Observers believed that stock market prices in the first 6 months of 1929 were high, while others saw them to be cheap. (1929…) On October 3rd, the Dow Jones Average began to drop, declining through the week of October 14th. (1929…)