The Great Depression
Published on Nov 20, 2015
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The Great Depression was the after-effect of the Crash of 1929.
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The Wall Street Crash, also known as "Black Thursday" took place on 24 Oct 1929, when the NYSE collapsed and continued to fall for a whole month. It is the worst market crash in history. What made Black Thursday such a bad day in the history of the New York Stock Exchange was the loss of people's faith in the Wall Street.
Since 1922, the stock market had gone up, not down. Everyone invested. When the stock market crashed, brokers called in loans. Many people were wiped out, selling businesses and losing their life savings.
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The crash led to the Great Depression. During the Depression, unemployment rose to 25%, wages fell 42%, economic growth fell 50%, and world trade plummeted 65%.
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Shanty towns comprise of poor people living in improvised residences which are made from scrap materials: often corrugated metal, plywood and sheets of plastic. It is a slum settlement also known as a squatter settlement.
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President Roosevelt decided to step up and get America out of the depression. He created a series of laws called 'The New Deal'.
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President Roosevelt's New Deal had three main goals. The first was to provide help to millions of suffering Americans. The second was to improve the economy. The third was to pass new laws so that there were not so many poor people. People called these the three R's of relief, recovery and reform.
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Several relief measures became law during the Hundred Days. One law set up a program that gave jobs to hundreds of thousands of young men. Their jobs included planting trees, fighting fires and working to control floods.
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Another law set up an agency that gave money to states to help the needy. One set up the National Recovery Administration. Its job was to get businesses, workers and the government together.
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Another major law tried to help the farmers by reducing the amount of crops they produced. Fewer crops would help raise prices. Then, the income of the farmer would rise. The government therefore paid the farmer not to plant crops.
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Keynesian economics is the theory developed by John Maynard Keynes, one of the most famous economists of all time, and it involves government intervention into the economy.
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When times are bad, government should pump money into the economy by spending more and taxing less. This helps the economy grow and creates more jobs. When times are good, government should raise taxes and spend less. This helps prevent inflation and keep things from getting out of control.
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