Great Depression and Its Causes

1256 WordsOct 5, 20056 Pages
The causes of the Great Depression of the 1920's and 1930's has been argued about for generations. Most people agree on several key topics and that it was the severity and length of time the Depression lasted that was actually the most remarkable. Hoover made many noteworthy attempts to try and solve this crisis, yet in the end it was President Roosevelt and his "New Deal", that brought many Americans hope for the future. The first factor in the start of the Depression was the lack of diversity in the American Economy. It relied strongly on only a few basic industries, notably the construction and automobile industries. In the 1920's those 2 industries began a rapid decline: construction became scarce and fell from 11 billion to under 9…show more content…
It was known as the RFC, the Reconstruction Finance Corporation a government agency whose purpose was to provide federal loans to troubled businesses, banks and railroads. Struggling industries could now take out loans, with the belief that the economic benefits would extend to all Americans creating more jobs than spending. This was the first time the Federal government became involved with the economy during a time of peace. Yet, the new agency failed to deal directly and forcefully enough with the real problems facing the economy from the Depression. It really only lent money to the institutions with sufficient collateral and those public works projects that promised to pay for themselves like public housing and toll bridges. The worst four months of the Depression happened in 1933, in the four months between Franklin Roosevelt's nomination to the presidency and his candidacy. Unemployment hit 25%, hundreds of banks failed and the inaugural date was moved ahead 2 months to January 20 where it remains today. Roosevelt was elected on his promise of a so called "New Deal", yet not telling Americans what it was. The New Deal was a legislative package of various acts to try and stimulate the economy and create new jobs. The first New Deal was to provide Relief, Recovery and Reform. Relief to provide jobs, recovery legislation for business and industries to recover from hard times and reform to pass legislation to stop another disaster
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