I have a great interest in the Great Depression and the growth of government and government policy since then. Needless to say it was a watershed moment in history that affects us to this day.
ROOTS OF THE DEPRESSION
I know the Great Depression is complicated but I want to make sure that I have the main causes down.
MYTH
Capitalism failed, Hoover didn’t do anything to help, and FDR rode in on his white horse and saved the day
REALITY
– WWI destruction and foreign debt. US debt went up 20 times, from 1.2 billion to 24 billion, mostly in the form of war loans to allies.
– Federal Reserve policy during the 20’s – easy money then contraction near the end of the decade.
-Smoot Hawley Tariff Act of 1930 (debated in 29) created a trade war and caused economic uncertainty. It also raised the price of foreign and domestic goods in a depressed economy, not to mention repudiation of war debt to the United States by foreign countries negatively affected by the tariff.
– Stock Market crash creates a panic even though it was a correction.
– Further Hoover intervention, such as the RFC, paves the way for FDR.
– FDR greatly expands the government with New Deal policy
– New Deal policy extends the Depression with contradictory policy, wasteful “make work” projects, and political corruption. The unemployment rate never drops below 14% until WWI. (to FDR’s credit, those on the govt dole via the CCC or WPA were not counted as employed)
– WWII allows for massive employment via domestic war material production, military draft, and replacement in the workforce of those fighting overseas. WWII did NOT end the depression. Rationing is not really the mark of a strong economy.
– The Great Depression really ended when WWII ended and the US was able to use its massive workforce to produce consumer goods.
What am I missing?
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