Economy During the Depression

Many people stood in lines in hopes of getting a job during the Great Depression.

The Great Depression altered the economic landscape of America. While the economic metrics of the Great Depression are staggering, possibly its greatest costs were the lives permanently changed because of its damage.

Commodity Prices

The Great Depression was caused by many factors, one of which was the price of commodities in Europe. As global demand decreased, so did the price of commodities. Instability in the commodity market caused fluctuations in the overall economy across the Atlantic, since so many industries depended on oil and wheat in their operations.

The Federal Reserve

Congress passed the Glass-Steagall Act to free gold into the market and create liquidity in Europe, but much damage was already done and the global economy was already in decline.

Unemployment

During the worst parts of the Great Depression, almost 30 percent of the nation's work force did not have a job. The employment situation started to turn around between 1933 and 1935, during which 4 million workers found jobs due to federal intervention programs such as the Tennessee Valley Authority.

Gross Domestic Product

From 1929 to 1935, the gross domestic product decreased by $30 billion. Even with all of the government jobs President Roosevelt created, the gross domestic product did not fully recover until the start of World War II.

Inflation

Bankers began to have concerns of inflation around 1937, and the Federal Reserve raised the reserve requirements on lending accordingly. Interest rates increased, thereby decreasing inflationary pressure. While this decision decreased inflation, it also slowed the economic recovery, although many experts concluded it was the right decision since it kept food prices under control.

Increased Trade

In 1934, Roosevelt began a series of international trade agreements to stimulate the gross domestic product and create jobs for Americans. Congress was at first hesitant of some of these agreements, which involved loans. Eventually these new trade agreements significantly helped the American economy.

References

• "The National Experience"; John M. Blum; 1973