The causes and resolution of The Great Depression

Essay by slinconA-, September 2006

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The 1930's and in general, some years following the first world war were some of the worst years in history. Billions of people worldwide were unemployed and homeless as men and women alike, in countries everywhere, struggled to support their families, and keep their children from starving. Every nation was affected; worst hit were the most industrialized, especially the United States.

In America, there were many factors contributing to the sudden economic crises that was the Great Depression. However, Franklin D. Roosevelt's plan to fix the nation that was the New Deal largely prevented the greatest problems contributing to the Depression, low money supply, unemployment and national panic regarding the banks.

The New Deal included many plans of reform as well as associations to prevent and to fix the Great Depresiion. For example, one of the most direct, initial and biggest causes of the Depression was the Stock Market crash in 1929. The problem? The crash caused millions to lose all the money they had invested, and because of this fear, they began hoarding money rather than investing in the banks, and in result millions of people lost all the money that they had in the banks.

To fix this, Roosevelt passed the Emergency Banking Act, which demanded that for four days, banks take a "holiday" so that the government could inspect and reopen "healthy" banks. This act put the American's faith back in the banking system and thus, resulted in more deposits. In fact, the day after the "banking holiday" was over, there were considerably more deposits than withdrawls recorded, a first in years.

To prevent Americans from losing money they save in banks, Roosevelt also created the Federal Deposit Insurance Corporation, which insured deposits in the bank up to 25,00 dollars, and in doing so, restoring american...