Impact of the Great Depression

Major Political Impacts of the Great Depression

When President Franklin D. Roosevelt assumed office, he hit the ground running with his New Deal, a series of government programs aimed at boosting the economy and providing relief to struggling Americans.

Fig. 3 - Franklin D. Roosevelt

During what is known as the First Hundred Days, he closed and inspected banks to restore public confidence. He also set into motion a number of programs and bills, including:

• The Banking Act of 1933: created the Federal Deposit Insurance Corporation (FDIC) to supervise financial institutions

• The Civil Conservation Corps (CCC): offered employment in conservation to young men so that they could send funding home to their families

• The National Industry Recovery Act (NIRA): created committees of industry leaders and union leaders to decide on wages, working conditions, and prices

• Agricultural Adjustment Act (AAA): paid farmers to not produce in order to limit overproduction and raise crop prices

This is not to say there were not important parts of the New Deal in the following years. For example, the Securities and Exchange Commission (SEC), created in 1934, became responsible for regulating the stock market. The Second New Deal, lasting from 1935 to 1936, continued on the same path of public welfare and faced more scrutiny by Republicans. Notable legislation and programs included:

• The Wagner Act: ensured the legality of the collective bargaining introduced by NIRA

• The Social Security Act (SSA): introduced a federal insurance program for the elderly, those with disabilities, and the unemployed

• The Works Progress Administration (WPA): employed individuals in various public works projects and; invested in the arts and employed artists, musicians, and actors

The New Deal greatly expanded the role of the federal government and introduced aspects of the welfare state—before the New Deal, the United States was the only industrialized country without Social Security or similar program. Some Americans, feeling jaded by capitalism, even had a newfound interest in the possibilities of socialism and communism.

Major Social Impacts of the Great Depression

During the Great Depression, no one was safe from layoffs. Professionals and unskilled workers alike found themselves without jobs. However, minorities and women were often the first to lose their jobs. White men entered occupations that were generally reserved for minorities and once considered beneath them. Domestic work, and occupations typically reserved for women, however, remained untouched.

Many families did not have any savings due to the stock market crash and bank closures, leaving them struggling to survive. There were increased rates of malnutrition, suicide, and theft. Rates of prostitution rose as many women were left without an option. The end of Prohibition offered a brief reprieve from daily sorrows, but it also contributed to increased rates of alcoholism. Access to proper healthcare was a luxury many could not afford, as was higher education. Marriage and birth rates dropped in the face of a grim future.

Major Social Impacts of the Great Depression: Hoovervilles

As we discussed earlier, President Hoover did little to help the average American when the Great Depression began. In fact, he actively vetoed a bill that would introduce a federal relief program. Without any federal aid, a significant number of Americans lost their homes. Homeless settlements developed on city outskirts where people lived in shacks made of scrap metal, lumber, and cardboard. They earned the name “Hoovervilles,” a nod to President Hoover’s lack of action.

Fig. 4 - a Hooverville in Seattle, Washington

Major Social Impacts of the Great Depression: The Dust Bowl

In the 1930s, dust storms ravaged the Great Plains region, particularly the states of Oklahoma, Kansas, Colorado, Texas, and New Mexico. Severe droughts and poor farming practices had led to lose topsoil, and when hit with strong winds, this topsoil contributed to horrific storms. During this period, many farms were ruined or simply abandoned. Without homes or means of employment, many farming families moved farther West to California. There, they found agricultural jobs with far lower wages.

Fig. 5 - a dust storm in Texas

Global Impact of the Great Depression

It is important to understand that America was not the only country experiencing the Great Depression. Other countries were seeing the same unemployment rates and lowered standards of living. But, as the Great Depression took hold, America took on a more isolationist position. The Smoot-Hawley Tariff Act, for example, increased the import tax to protect and support American businesses. While it had little effect in America, it dealt a blow to the world economy as other countries rushed to institute taxes of their own.

Impact of the Great Depression on Europe

America’s isolationist stance also led the nation to halt loans to European countries who needed the funding more than ever. Unfortunately, economic instability led to political instability in many countries. In this power vacuum, totalitarian and fascist leaders gained power, such as Adolf Hitler in Germany and Benito Mussolini in Italy.