While there are differing opinions by scholars as to what was the cause of the Great Depression depending on their own personal view of the American economy, the end result was the same and the program implemented to get America back on track, the New Deal, was one of the most wide-reaching and important social programs put in place by an American president in history. The causes of the economic depression are varied and extremely complex.
In 1929, the stock market crash and the failure of many American banks resulted in the loss of fortunes for many Americans, and they were not able to regain their money because of the system in place at the time. The decline into the economic depression happened in the following three years, and scholars still debate what the real causes were. Some blame the free market, while others feel that the government was not involved enough in the economic development of the nation. Other economists point to the changes in the British economy.
The British returned to the Gold Standard at pre-World War I parities, and economists like Peter Temin view this as the major reason for the economic depression in America during this period. Other changes helped bring about the depression as well. When businesses and people began to not be able to pay their debts, including mortgages, because of price deflation or lower demand for products, with the result being a 25% unemployment rate. In the end, the result was the same: poverty run rampant and a sense of hopelessness amongst Americans.
The first time poverty was seen as a social problem was during the Great Depression, a time when so many Americans were facing economic despair and lack of employment. It was a hopeless time for many Americans, and the President responded with strong social programs to help get the country back on track. The New Deal, including the Works Progress Administration and Social Security, helped to give Americans something to fall back on when times were tough, as well as something to build upon to help them get out of their current state of helplessness.
Regulations were instituted, minimum prices and wages were put into place, encouraged unions, and setting labor codes and standards. It was the first time the government had given a hand up to Americans in poverty. The New Deal was radical in many ways because prior to this, the government did not view poverty as a social problem that the government needed to deal with. The American people were suffering from hard time, as was American business, and because of this economic depression America was set back in terms of growth.
This change caused the President to radically change the way the government thought about poverty. When people study the progression of poverty from being simply a part of everyday American life to being a social problem that required attention and governmental intervention, both on a national and international level, they need to understand that for many years poverty was thought to be a necessary evil, and many people felt that they could not help overcome the poverty they saw many people living in. Without this balance, a society will fall into a situation where there are only those in poverty and those in wealth.
When Roosevelt was faced with issues of extreme poverty in a large segment of the American public he knew that he had to react. In Roosevelts case, he reacted with short-term and long-term solutions in the form of help to find the unemployed work and Social Security, still in use today. These radical new programs, known as the New Deal, were an important movement in American economic history as it marked a time when the United States began to take more action in the business and economic affairs of its nation, starting with the programs implemented with the New Deal.