Great Depression Effects Essays - Great Depression, Systemic Risk

Great Depression Effects Many times throughout history the United States has undergone economic depression. The most recognized period of economic depression is called the Great Depression. The Great Depression is well known because of the seriousness of the stock market crash. The results of the crash were more serious than any other crash throughout American History. The Great Depression caused a change in the nature of the American family, an increase in poverty, and President Herbert Hoover's proposal for immediate action by the government, balanced his belief in "rugged individualism" with the economic necessities. While most Americans are familiar with the Great Depression as a time of economic disaster, it also had an impact on the American Family life. There were obvious differences in the classes as a result of the Great Depression. The lower and the middle classes changed considerably, but the upper class lifestyle did not vary a great deal. (Simmons 41) The father's role as head of the household became more challenging because there were fewer jobs. The expectation was for fathers to work and support their families. The reality of the lower class was that few men brought home paychecks. Some fathers suffered anxiety and a feeling of worthlessness for failing to provide for their families. Many resorted to stealing food and money just to survive. (Simmons 41) Women were offered greater opportunities in the work force, however they tended to take the position of stay-at-home mothers. According to Simmons "Men resented employed women for they felt that they were occupying jobs that could be given to unemployed men."(Simmons 43) Children in the lower class were expected to get an education so that they could improve their situation. In addition they were needed at home to help with household chores. Unfortunately, many poor children dropped out of school because of their obligations at home. Children in the middle class were better than those in the lower class. They had the opportunity to stay in school and were treated to some luxuries. The children of the upper class families received an excellent education and were treated to many luxuries. (Simmons 42-43) Along with a change in the American family life, there was also an increase in poverty. The Great Depression was an intense time of poverty. The downfall of American businesses, the closing of banks, and the lowered employment contributed to this period of destitute. According to an old study "26,000 American businesses collapsed; in 1931, 28,000 more met the same fate. And by the beginning of 1932, nearly 3,500 banks, holding billions of dollars in uninsured deposits, had gone under. Twelve million people were unemployed (nearly 25 percent of the workforce), and the real earnings for those still lucky enough to have jobs fell by a third" (Internet). This statistical evidence effectively illustrates the increase in poverty caused by the Great Depression. An additional result of the Great Depression was that President Hoover balanced his belief of "rugged individualism" with the economic necessities of the time by proposing direct action by the government. Hoover had only been in office for eight months when the stock market crashed. At first he treated this financial disaster and decline in employment and business that followed the Great Depression as a panic. According to The American Pageant "He was accused of saying, yet did not use these precise words, that prosperity was just around the corner" (Bailey 776). As the depression got worse Hoover became more and more concerned about the troubles of Americans. Hoover refused to agree with the request of the Democrats in Congress, who wanted the government to distribute money to the unemployed. "...[Hoover] as a "rugged individualist" deeply rooted in an earlier era of free enterprise, shrank from the heresy of government handouts. Convinced that industry, thrift, and self-reliance were the virtues that made America great, President Hoover felt that a government doling out doles would weaken, perhaps destroy the national fiber..."(Bailey 776). However, President Hoover "would assist the hard-pressed railroads, banks, and rural credit corporations, in the hope that if financial health were restored at the top of the economic pyramid, unemployment would be relieved at the bottom on a trickle-down basis" (Bailey 777). In order for Hoover to do so he introduced The Reconstruction Act. This Act was created to prepare emergency financing for banks, insurance companies, and other companies. The Glass-Steagall Act used government gold reserves to help industry. The Federal Home Loan Bank Act created discount banks to help refinance homes and prevent foreclosures. Hoover also wanted the reform of bankruptcy laws to help in the