How successful was President Roosevelt at reducing the rate of unemployment and inflation during the Great Depression?

How Successful Was President Roosevelt At Reducing The Rate Of Unemployment And Inflation During The Great Depression?
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The Great Depression
Introduction
The Great Depression (1929-39), the deepest, most pervasive and longest-lasting economic downturn in the American history and also in the history of the Western industrialized world. The effects of the depression were massively felt in virtually all corner of the world as it was one of the great economic disasters in history. The Great depression’s timing greatly varied across the nations, but in a good number of countries it started in 1929 but lasted until the late 1930s. In the U.S., the world’s deadliest economic downturn began soon after the crash of the stock market of October 1929. The stock market crash sent Wall Street into a panic and also wiped out millions of investors. The following several years experienced a drop in investment and consumer spending that resulted in steep decreases in industrial output as well as rising levels of unemployment as several failing companies laid off workers.
Being the most widespread economic downturn of the 20the century, the worldwide GDP fell by approximately 15 percent from 1929 to 1932. The Great Depression was moderately mild in some nations; however, it was very severe in other countries, especially in the United States. In the U.S. at its nadir in 1933, 37 percent of nonfarm employees and 25 percent of all workers were rendered jobless.

Many individuals lost their homes and firms; some other starved. The economic downturn has devastating effects in nations poor and rich. There was a drop in tax revenue, personal income, prices and profits and the international trade plummeted by over 50 percent. The unemployment in the United States increased to 25 percent while in other countries it rose as high as 33 percent. Additionally, in the U.S. nearly half of the banks had failed, and this necessitated a quick intervention. President Franklin D. Roosevelt intervened and put relief and reform measures in place to help eliminate the vice, however, the measures only assisted in lessening the worst effects of the depression in the 1930s, but the economy would not completely pivot until after 1939 when the Second World War kicked American industry into high gear.
The economy after World War I
The effects of the First World War on the economy of the United States were considerable. The war had two effects on the US economy; long-term and short-term. For the US economy’s short-term effects, the WWI resulted in the growth of the economy in the buildup to the war as well as during its execution. From the year 1915, the United States of America made huge amounts of advances in the form of loans to the UK to aid them in their war efforts. The US economy was in recession when the war broke out, but the economy boomed due to the rise in European’s purchase of U.S. products for war. The war unleashed the high Unite States federal spending that caused a rise in the production of war goods. This resulted in the employment of 3 million people to the military and 500,000 to the government. Overall, it causes a decline in the unemployment rate from 7.9 percent to 1.4 percent between 1914 and 1918.
The First World War had several legacies for the economy of the United States. When the war started, the U.S. was a net debtor in the international capital markets, foreigners invested a lot of money in the U.S that Americans did in other countries. The foreigners invested approximately three thousand dollars more. However, after the war the U.S. started investing massive amounts internationally, especially in Latin America. This implies the United States began playing the role that was previously played by Britain as well as other European capital exporters. The weakened Britain and hence New York rose as the equivalent of London at later become her superior in the contest of the world’s leading financial center . The increasing foreign investment was one of the signs of growing American economic power. Besides, by the end of the First World War, the US produces more services and goods than any other country, both per person as well as in total. By 1920, the national income of the United States was higher than the combine national incomes of Germany, Canada, France, Japan, Britain, and seventeen other smaller countries. The World War I had just made the U.S. the world’s greatest economic power. It is, therefore, true to say that the First World War was the central point in adding to the “Thundering 20s” when the economy of the United States boomed. However, after the peace was reached the U.S. economy dropped briefly particularly due to the halting of the war production material.
On the other hand, by that time the US was the main nation that had not been totally crushed by the impacts of the war. American corporations had the capacity to extend their stretch all over the world. There was an increase in domestic consumption in the U.S. resulting in the name “The Roaring 20s.” Therefore, the short-term effect was that the U.S. active involvement in the First World War resulted in the substantial growth of the US economy. The growth of the US economy created massive economic strengths that influenced its policies towards other nations in the 1920s, for instance, Europe. A good example of such issues was the economic aid that they gave European countries during WWI. The United States had great resources and population that made them a great continental power. WWI stimulated the economy of the US hence led to great profit to industries and the increase in employment and wages. The US emerged from the war as the creditor nation of the world. The US sold food and medicine to the UK as well as the allies. However, the end of the war caused a recession for US farmers and the agricultural industry due to added competition from South America. In addition, lesser demand for American products from Europe and deflationary Federal Reserve policies caused bankruptcy to a large portion of the American society.
The long-term effect of the US involvement in the First World War leads directly to WWII as well as the Great Depression. For instance, the Treaty of Versailles created or prompted a framework where the United States was cashing in its wartime advances to the UK. This in turn was utilizing the wartime reparations the UK got from Germany to pay off the US. The framework or system broke down when the economy of Germany gave away to hyperinflation and died and the incident matched with Black Tuesday that was greatly driven by uncontrolled stock speculation from a massive number of the US Nationals’ flush with money prompted the Great Depression. Everything else fell apart when the economy of Germany fell because the world was still reeling from the impacts of the First World War.
How the Great Depression occurred
The Great Depression was not caused by a factor but by a combination of both domestic as well as worldwide conditions. The effects of the worst economic depression in the history of the United States were massive across the US as well as across the world. It led to the New Deal in the US as well as the rise of extremism in Germany resulting in the Second World War. A major cause of the Great Depression was a stock market crash of 1929. Although many people believe that the stock market crash of Black Tuesday, October 29, 1929, is the same with the worst economic depression, the truth is that it is the cause of the depression. The stock crash resulted in the loss of over $40 billion by the stockholders. Although it began regaining some of the losses, it just was insufficient, and the US had entered the Great Depression.
Another dramatic event that caused the Great Depression was the failure of the banks. Throughout the 1930s, more than 9000 banks failed. As banks failed, individuals lost their savings because banks deposits were not insured. Surviving banks stopped their willingness to create loans because they were not sure about the economic situation but more concerned with their survival. This even exacerbated the situation thus resulting in less and fewer expenditures causing the depression. The stock market crash, as well as bank failures, decreased the spending power of the stockholders who lost money. The stock market crash on Black Tuesday wiped out many investments of individuals and understandably shook the public. And when the failure of the banks erased the savings of individuals who did not invest in the stock market, people were shattered.
Additionally, reduction in purchasing across the board caused the depression. The stock crash coupled with fears of further economic problems, individuals from all walks of life stopped buying items resulting in the decrease in the quantity of items produced. The reduction caused a decrease in the workforce and the loss of jobs reduced the ability of people to keep up with paying for the products they had purchased through installment plans. Their items were repossessed resulting in the accumulation of more and more inventories. On the other hand, the unemployment rate increased to more than 25 percent that implied less spending to aid in alleviating the economic situation thus causing the worst depression.
The Fickle Fed also caused the depression. In the stock crash, the Fed cut the money supply by close to a third which choked of hopes of the economy recovering. The banks that suffered liquidity woes went under. On the other hand, the Fed increased the money supply and kept interest rates low especially during the roaring 20s, and this instigated the rapid expansion preceding the collapse. The increased money supply set up the market bubble resulting in the crash. The Fed’s mismanagement of the economic situation highly contributed to the worst depression.
President Roosevelt policies and their impact on the economy during the Depression
Amid the worsening economic condition, President Roosevelt took immediate action in addressing the economic woes of the country. First, he announced a four-day “bank holiday.” During the period, all the banks would close as the Congress could pass reform legislation and reopen the banks with a determination to being sound. Roosevelt also took the initiative of addressing the public directly over the radio that went a long way in restoring public confidence. Besides, Roosevelt created the “New Deal” along with his Democratic party to create relief jobs assisting in the reduction of unemployment. He proposed ideologies such as Work Progress Administration, WPA, and Civil Works Administration, CWA, to create jobs and reduce unemployment. The New Deal introduced federal relief programs that targeted the unemployed and the poor. However, the projects were not effective since the government sending of the projects created inflation and no making of tax cuts thus making the New Deal a slow process. All the relief programs created more inflation and slowed down the unemployment process. However, the New Deal was ineffective since it just deepened the Depression.
Additionally, Roosevelt’s administration passed legislations aiming at stabilizing industrial and agricultural production, creating jobs and stimulating recovery. He began by reforming the financial system by creating the Federal Deposit Insurance Corporation, FDIC, to aid in the regulation of depositor’s account as well as the Securities and Exchange Commission, SEC, to aid in the regulation of the stock market and avert the abuses that resulted in the stock crash of 1929.Another program of the New Deal was the Tennessee Valley Authority, TVA, which assisted in recovery from the depression. The project established dams as well as hydroelectric projects to provide electric power and control flooding. On the other hand, the Congress passed a bill (Agricultural Adjustment Act) aimed at paying commodity farmers to leave the fields fallow so as to end agricultural surpluses thus boosting prices.
Although President Roosevelt along with his cabinet made the best efforts in addressing the economic downturn, the Great Depression continued, the economy of the nation continued to wheeze; people grew more desperate and angrier, and unemployment persisted. According to John Keynes and the Keynesian Theory, the economic approach taken by Roosevelt was ineffective in restoring the economy. It was necessary for Roosevelt to take aggressive actions in jumpstarting the economy because depressions do not disappear on their accord. The New Deal plan inflated the economy with millions of dollars in order to produce jobs, however, the lack of sizeable tax cuts and aggressive government spending programs from the public thereby severing the depression. The New Deal aimed at stimulating the private sector but instead supplanted it. The policies aimed at reducing unemployment but failed to pull it down near enough to claim sustained recovery. This implies that President Roosevelt was only successful in the short-run at reducing the rate of unemployment and inflation during the Great Depression but severed it in the long run.
In summation, Roosevelt intervened and put relief and reform measures in place to help eliminate the vice, however, the measures only assisted in lessening the worst effects of the depression in the 1930s but the economy would not completely pivot until after 1939 when the Second World War kicked American industry into high gear.

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