The Key Causes and Effects of the Great Depressions, and the New Deal's Impact on the Nation

Paper Type:  Essay
Pages:  4
Wordcount:  882 Words
Date:  2022-10-25


The Great Depression is the worst economic downfall that faced the world in the 1930s. While the Great Depression was prevalent across the world, it is more attached to the United States since it started in the country after the stock market crash on Black Tuesday. The fact that the United States was still the world's leading economy its stock market crash affected other countries in the subsequent months and years. Therefore, the paper intends to share some of the possible causes and effects of the great depression. The New Deal program was vital since it relieved the United States from the damages caused by the Great Depression.

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The Causes of the Great Depression

The first likely reason why the great depression happened is that of the stock market crash in 1929. Notably, the infamous Black Tuesday refers to October 29 in 1929 when the American stock market crashed, thus implying that the stockholders' activities were limited in the whole country. Notably, one of the main reasons why it is right to state that it had adverse economic effects is because it resulted in the loss of about $40 billion within two months of its crash. Whereas the market would try to recover in the subsequent months, it was not enough for the country, hence the reason why the United States entered a severe economic depression in 1929. Second, the fact that banks failed across the 1930s means that it was also another cause for the great depression (Foner 19). More than 9,000 American banks failed across the 1930s, thus implying that most of the people lost their savings to the banks, hence making it impossible to engage in trade and resulting in the great depression. The American economic policy in Europe was yet another major contributor to the Great Depression. The fact that the country was facing challenges, they decide to pose strict trade rules against European countries. The creation of the Smooth-Hawley Tariff in the 1930s meant that the United States was supposed to engage in limited trade with other nations. While the rule aimed at protecting American traders, it led to economic depression since there were limited commercial activities in the country. The United States would have only been in a position to achieve economic prosperity if they open the borders to engage other nations in trade.

The Impacts of the Great Depression

First, the great depression resulted in unemployment. The previous section indicates that thousands of banks closed during the stated period, thus indicating that there were no vacancies for most people who worked in these departments. Although American has registered the lowest unemployment rate of about 3% during the Roaring Twenties, the country faced one of the highest unemployment rates during the Great Depression as it was about 24%. There was limited monetary circulation, thus the reason even those who companies were still functional remained unwilling to hire employees during that period. Second, the great depression also resulted in an increase in crime rate in the nation. The fact that most people, especially the youths, stayed unemployed during this era implied that they had to engage in criminal activities to seek means of survival. Moreover, the country's higher level education system was also affected by the great depression. The 1930s registered the lowest number of college entries in the United States since most people could not afford the tuition fees, and the government was not in a position to provide support. Therefore, most youngsters failed to join college or any other institution of higher learning during the Great Depression era.

The New Deal's Impact on the Nation

The New Deal had a positive impact on the country since it was a source of relief for various reasons. First, the use of the New Deal led to the end of unemployment in the United States. Whereas unemployment was r5ampant during the earlier days of the great depression, the implementation of the New Deal created an opportunity to achieve government support to the unemployed. Therefore, one of the possible means that the government ensured that unemployment was reduced was through Industry Recovery Program. Most of the American companies had ceased to operate as at the beginning of the great depression, but the recovery program ensured that their revival. The bank's revival is yet another notable impact of the New Deal to the country. The creation of the New Deal meant that the Treasury was supposed to oversee the opening of the banks through the Banks' reforms. Therefore, it is realistic to state that the New Deal was a general benefit to the country since it created an opportunity to achieve prosperity through the solutions above.


In brief, the paper has provided a detailed analysis of some of the causes and impacts of the Great Depression. For the causes, the stock market crash that happened in 1929 is arguably the main reason why the United States went into economic depression. Therefore, the fact that most of the banks and other business stopped their operations, it meant that the country would face an upsurge in unemployment. Nonetheless, the application of the New Deal which ensured that the government provided relief to various sectors boosted the nation's economy.

Work Cited

Foner, Eric. Give Me Liberty! An American History: Fifth Edition, One Volume. New York : W. W. Norton & Company, 2016.

Cite this page

The Key Causes and Effects of the Great Depressions, and the New Deal's Impact on the Nation. (2022, Oct 25). Retrieved from

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