3.3 THE GREAT DEPRESSION:
The Great Depression was a worldwide economic crisis that marked by widespread unemployment, in industrial production and construction, and an 89% decline in stock prices. It was preceded by the so-called New Era, a time of low unemployment when general prosperity masked vast disparities in income.
The start of the Depression is pegged to the stock market crash of “Black Tuesday,” Oct. 29, 1929.
Over the next several years, consumer spending and investment dropped, causing steep declines in industrial output and rising levels of unemployment as failing companies laid off workers. By 1933, when the Great Depression reached its nadir, some 13 to 15 million Americans were unemployed and nearly half of the country's banks had failed.
3.3.1 The "New Deal"
The Agricultural Adjustment Act (AAA), accepted the long-held premise that low farm prices resulted from overproduction.
The 1933 National Industrial Recovery Act (NIRA) set up the New Deal's fundamental strategy of centralized planning as a means of combating the Depression. Industrial sectors were encouraged to avoid "cutthroat competition" (selling below cost to attract dwindling customers and drive weaker competitors out of business).
The "First" New Deal's Tennessee Valley Authority (TVA) reflected the future liberal methods of the "Second" New Deal. The TVA (1933) provided millions of dollars to transform the economies of seven depressed, rural Southern states along the Tennessee River. The program included dam-building, electric power-generation, flood and erosion control. It provided relatively high-wage jobs in construction in a region the president called "the nation's number one economic problem."
The "second" New Deal attempted to end the Depression by spending at the bottom of the economy where government funds attempted to turn non-consumers into consumers again. Many of the programs lasted only until World War II.
The works they created consisted of mainly of construction of public roads, buildings and parks. Over the course of this program (1935-43) over eight million Americans worked on WPA projects.
There are a lot of consequences of the Depression and the New Deal such as the rise of the "Roosevelt Coalition" of farmers, union members, working class people, blacks and liberals made the Democratic Party the nation's dominant party for almost sixty years. Also, the political consensus that developed after World War II held that never again the government should allow another depression.
3.3.2 Europe and the Big Depression
In Europe, the Great Depression strengthened extremist forces and lowered the prestige of liberal democracy.
In Germany, economic distress directly contributed to Adolf Hitler's rise to power in 1933. The Nazis' public-works projects and their rapid expansion of munitions production ended the Depression there by 1936
Here we can see some graphics between crisis in 1930s and 2007.
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