.
4
HIST C121 Task 4: The Making of Modern America
A. Causes of the Great Depression
The Great Depression, characterized as one of the most severe economic
downturns in history, arose from the convergence of multiple factors during the
1920s and 1930s. One major cause was the flawed economic policies and practices
that characterized the era. In the 1920s, there was a period of excessive speculation
and overleveraging in the stock market. This led to a speculative bubble, causing
stock prices to soar to unsustainable levels. Consequently, the crash of the stock
market in October 1929, which marked the beginning of the Depression, resulted
in the loss of significant wealth and investor confidence. Additionally, the Federal
Reserve's failure to intervene effectively and its restrictive monetary policies
exacerbated the crisis, as it limited the availability of credit and liquidity in the
banking system. (Norton, 2015)
Another crucial cause of the Great Depression was trade concerns and
international commerce disruptions. The Smoot-Hawley Tariff Act of 1930 was
among the protectionist trade policies adopted by the United States and other
nations. By increasing tariffs on imported goods to safeguard domestic industries,
this act resulted in retaliatory measures from other countries, severely obstructing
global trade. International trade volume plummeted, exacerbating the economic
downturn and leading to a collapse in commodity prices and agricultural markets.
, This had a devastating impact on farmers and industries heavily reliant on
international markets. The combination of economic policies, trade disruptions,
banking practices, and stock market speculation culminated in a severe economic
crisis that lasted for years, causing widespread unemployment, poverty, and
hardship for millions of people during the
Great Depression. (Eichengreen, 2008)
B. The New Deal and the Great Depression
Seeking to provide relief and recovery from the Great Depression, President
Roosevelt endorsed a series of programs and policies which became known as The
New Deal. The New Deal introduced significant legislation to oversee and ensure
stability of the financial system was implemented to divide commercial and
investment banking operations, aiming to prevent another stock market crash and
safeguard bank deposits. Additionally, the Securities Act of 1933 and the Securities
Exchange Act of 1934 significantly contributed to restoring investor trust through
enhanced transparency and regulation of the securities industry, fostering a more
stable and secure financial landscape. (Eichengreen, 2008)
Another key element of the New Deal was the creation of organizations
dedicated to creating employment opportunities for those impacted by the
Depression by establishing the Civilian Conservation Corps (CCC) and the Works
Progress Administration (WPA) creating employment opportunities through
conservation projects nationwide, and various public works projects. These
initiatives not only offered immediate relief but also left a long-lasting effect on the
4
HIST C121 Task 4: The Making of Modern America
A. Causes of the Great Depression
The Great Depression, characterized as one of the most severe economic
downturns in history, arose from the convergence of multiple factors during the
1920s and 1930s. One major cause was the flawed economic policies and practices
that characterized the era. In the 1920s, there was a period of excessive speculation
and overleveraging in the stock market. This led to a speculative bubble, causing
stock prices to soar to unsustainable levels. Consequently, the crash of the stock
market in October 1929, which marked the beginning of the Depression, resulted
in the loss of significant wealth and investor confidence. Additionally, the Federal
Reserve's failure to intervene effectively and its restrictive monetary policies
exacerbated the crisis, as it limited the availability of credit and liquidity in the
banking system. (Norton, 2015)
Another crucial cause of the Great Depression was trade concerns and
international commerce disruptions. The Smoot-Hawley Tariff Act of 1930 was
among the protectionist trade policies adopted by the United States and other
nations. By increasing tariffs on imported goods to safeguard domestic industries,
this act resulted in retaliatory measures from other countries, severely obstructing
global trade. International trade volume plummeted, exacerbating the economic
downturn and leading to a collapse in commodity prices and agricultural markets.
, This had a devastating impact on farmers and industries heavily reliant on
international markets. The combination of economic policies, trade disruptions,
banking practices, and stock market speculation culminated in a severe economic
crisis that lasted for years, causing widespread unemployment, poverty, and
hardship for millions of people during the
Great Depression. (Eichengreen, 2008)
B. The New Deal and the Great Depression
Seeking to provide relief and recovery from the Great Depression, President
Roosevelt endorsed a series of programs and policies which became known as The
New Deal. The New Deal introduced significant legislation to oversee and ensure
stability of the financial system was implemented to divide commercial and
investment banking operations, aiming to prevent another stock market crash and
safeguard bank deposits. Additionally, the Securities Act of 1933 and the Securities
Exchange Act of 1934 significantly contributed to restoring investor trust through
enhanced transparency and regulation of the securities industry, fostering a more
stable and secure financial landscape. (Eichengreen, 2008)
Another key element of the New Deal was the creation of organizations
dedicated to creating employment opportunities for those impacted by the
Depression by establishing the Civilian Conservation Corps (CCC) and the Works
Progress Administration (WPA) creating employment opportunities through
conservation projects nationwide, and various public works projects. These
initiatives not only offered immediate relief but also left a long-lasting effect on the
