Great Depression’s Political and Economic Outcomes

In 1929, the world saw the emergence of the Great Depression that disrupted economic activities for at least ten years. Mainly, a contraction of economy in the United States denoted the commencement of the Great Depression as the price of stocks dropped significantly. Apart from affecting the economy, the Great Depression also changed the political climate of the United States since policymakers sought to develop strategies that would cushion Americans from detrimental outcomes of the event. Economic stagnation posed social consequences for the United States population as denoted by dramatic changes in various customs, beliefs, practices, and behaviors, as well as lifestyles. As such, the Great Depression exposed the United States to a vast array of political, economic, and social issues that influenced the development of the country. In this respect, this paper addresses the consequences of the Great Depression for the political, economic, and social aspects of the United States.

The Political Consequences

The Great Depression affected United States’ politics to a considerable degree. Notably, the presidency of Herbert Hoover, extending from 1929 to 1933 was influenced by economic stagnation significantly. Hoover, the country’s 31st president, started his reign with the crash of the stock market, leading to the onset of the Great Depression in 1929 (Bartels 52). Hoover promoted uncontrolled capitalism, leading to trading activities that prompted the stagnation of the United States’ economy (Bartels 52). In this respect, Hoover’s advocacy for an economy characterized by unrestricted capitalism failed miserably, and thus forced Americans to consider electing a leader who would establish practical solutions that would end the Great Depression.

Americans voted for Franklin Roosevelt after he promised that he would institute spending changes that would facilitate the end of the Great Depression. Mainly, Roosevelt saw the need for enhancing government spending to prevent the continuation of the Great Depression. As such, he termed the strategy as “The New Deal” that would liberate Americans from the adverse effects of economic turmoil. Roosevelt approved “The New Deal” into law within 100 days after assuming the presidency (Bartels 57). The move resulted in the expansion of the United States government as signified by the establishment of at least 42 agencies (Bartels 57). The policy sought to facilitate the creation of job opportunities, encourage unionization, and offer employment insurance to the people. The essential programs that attempted to deal with the Great Depression included the Federal Deposit, Insurance Corporation, Securities and Exchange Commission, and Social Security.

In 1934, “The New Deal” started to yield positive outcomes as the economy reported a significant growth of 10.8% (Saint-Etienne 90). The unemployment rate also declined after integration of “The New Deal” (Saint-Etienne 90). In this respect, the political interventions of President Roosevelt played a considerable role in promoting economic growth and development immediately after the implementation of “The New Deal”. By 1928, the United States debt rose to $5 trillion, thereby prompting Roosevelt to consider cutting government spending. Nonetheless, the strategy triggered the resumption of the Great Depression since the government lacked adequate funds to finance various programs, which sought to stabilize the socio-economic facets of the country’s development (Riumallo-Herl et al. 1515). Roosevelt committed a political mistake that took the United States back to the devastating conditions, which undermined prosperity of the American people.

Politicians in the United States learned from the mistake of Roosevelt and engaged in the establishment of expansionary fiscal policies instead of cutting government spending. Today, politicians depend on deficit spending, as well as tax cuts to streamline government spending (Bartels 63). The United States’ politicians recognize the effectiveness and efficiency of government spending as crucial towards mitigating the occurrence of economic crisis in the future. The idea that government spending was good for fostering economic and political well-being of the United States prompted the politicians to consider applying the strategy in the Second World War. As such, the United States engaged in significant government spending during the Second World War with the perception that the approach would boost the economy significantly (Saint-Etienne 87). Eventually, the military spending contributed to the emergence of the United States as a global superpower.

The Economic Consequences

The Great Depression affected the economy of the United States in a wide array of ways. The country’s wealth went down by at least 50% in the first five years of the financial turmoil (Riumallo-Herl et al. 1511). By the end of 1929, at least 650 commercial banks collapsed, signifying the negative implications of the Great Depression on the country’s banking sector (Riumallo-Herl et al. 1511). The following year saw the United States record a decrease in Gross Domestic Product (GDP) by a considerable 8.5% before recording 6.5% fall in 1931(Riumallo-Herl et al. 1511). In 1932, the United States witnessed a further reduction of the GDP by 12%, symbolizing a radical decline of economy since the onset of the Great Depression (Riumallo-Herl et al. 1514).

During the five-year period, deflation orchestrated the economic slump as prices fell considerably. Prices dropped by 10% annually, indicating the degree of financial instability in the country (Riumallo-Herl et al. 1514). The Great Depression created a noteworthy unemployment level, thereby subjecting Americans to a great deal of suffering. The United States reported an unemployment rate of 25% in 1933, a considerable increase from a 3% level in the previous year (Saint-Etienne 112). The workers suffered as wages dropped by at least 42% (Saint-Etienne 112). In other words, the Great Depression created an unemployment crisis in the United States as a majority of the people could not secure jobs.

A significant number of farmers lost their farms. Furthermore, a period of over cultivation, as well as drought led to the emergence of the ‘Dust Bowl”. As a result, the Midwest region lost its fertility, leading to the decline of agricultural production in the country. The challenge resulted in the rise of food shortage, thus threatening the economic and social well-being of Americans. Many farmers and other unemployed individuals relocated to California in search of employment opportunities. However, due to lack of sustainable job opportunities, many people ended up as homeless. The situation prompted the emergence of shantytowns referred to as “Hoovervilles”, signifying the adverse effects of President Hoover’s administration (Saint-Etienne 82). The unemployment problem created social challenges as portrayed by the issue of homelessness and the emergence of shantytowns.

Roosevelt’s administration saw the establishment of “The New Deal” that facilitated economic recovery. The model engineered a new approach to government spending that saw the economy record a remarkable 10.8% growth in GDP by 1934 (Saint-Etienne 82). The subsequent three years saw the GDP grow by 8.9%, 12.9%, and 5.1%, respectively (Saint-Etienne 82). The Great Depression prompted the government to establish policies that would facilitate recovery of the economy from stagnation it had experienced since 1929. The reduction in government spending in 1938 encouraged a return of the Great Depression, thereby slowing down economic growth of the United States.

The economy declined by a sizeable 3.3%, hence denoting the effectiveness of “The New Deal” in streamlining the country’s financial growth. The Second World War led to the United States increasing its expenditure on military operations, thus bolstering the growth of the economy by 8% and 8.8% in 1939 and 1940 respectively (Riumallo-Herl et al. 1514). Moreover, “The New Deal” and military spending in the Second World War accounted for change in the structure of the United States economy. Notably, the country embraced a mixed financial system and got rid of the pure market economy that characterized the era of the Great Depression. The United States economy realized continued growth and development, especially in the 1940s, following the adoption of a mixed financial system.

The Social and Cultural Consequences

The Great Depression influenced the social and cultural aspects of the American society to a considerable degree. The repercussions of the depression are still felt up to date. The “Dust Bowl” resulted in a devastating housing problem that led to the emergence of “Hoovervilles” (Saint-Etienne 59). The housing issues undermined the social well-being of the American people as unemployment challenges heightened. The housing problem contributed to the emergence of at least 60,000 informal settlements in the United States, hence signifying the impact of the Great Depression on the social welfare of the people.

Most Americans lost their savings following the Great Depression. The Americans who had invested in the stock markets before the Great Depression incurred immense losses (Riumallo-Herl et al. 1512). Given that most Americans secured loans to finance their investments in the Wall Street, they could not repay the loans and were forced to auction their homes to refund the money. The situation led to the issue of homelessness that created further socio-economic challenges. The unemployment state, which resulted from economic stagnation, undermined the ability of breadwinners to provide for their families. Consequently, by 1933, at least 50% of the children in the United States resided in orphanages (Saint-Etienne 74). As such, the unemployment issue undermined proper growth and development of many children across the country since their parents could not adequately provide for their basic needs. Furthermore, over 250,000 children left their homes to seek employment (Cherlinet al. 216). It resulted in the rise of the problem of child labor. The movement of children from homes to towns in pursuit of employment signified the absence of cohesion in a lot of families due to economic turmoil occasioned by the Great Depression.

The rate of suicides also increased in the United States as men regarded death as the best way of handling loss, shame, and failure. As such, the 1930’s recorded suicide rates of at least 18.9 per 100,000 people (Cherlinet al. 218). The Americans witnessed an increase in the cases of horrific deaths that arose from the despair induced by the Great Depression throughout the economic turmoil. Deceased families encountered considerable extents of grief, loss, and diminished quality of life. The Great Depression necessitated the abolishment of the Prohibition policy that regarded the sale of alcohol as illegal (Riumallo-Herl et al. 1510). The lifting of the Prohibition policy led to the government acquiring revenues to finance “The New Deal” (Riumallo-Herl et al. 1510). The society had avoided the problem of alcoholism for many years (Riumallo-Herl et al. 1510). The suspension of Prohibition policy led to people going back to their drinking ways, thus facilitating economic recovery.

Most societies perceived the Great Depression as a sign of the end of the American Dream because it endured for long. Notably, economic stagnation undermined the pursuit of happiness among the Americans since they lacked the resources to satisfy their needs. Thus, many people despaired following the crumble of the Wall Street in 1929 (Saint-Etienne 59). The increased levels of unemployment, bankruptcies, and the lack of adequate housing facilities compounded the feeling of despair. Nonetheless, the Great Depression forced society to regard accumulation of material possessions as vital towards enhancing the realization of the American Dream amid the occasions of hard times.


The Great Depression impacted the political, economic, and social elements of the United States in devastating ways. The establishment of “The New Deal” sought to reduce the sufferings experienced by the Americans. The economic crisis stirred the development of policies that would lessen the sufferings of Americans. Furthermore, the event undermined the growth of the American economy as denoted by significant unemployment and decline in the agricultural sector. The Great Depression threatened the social well-being of the United States by creating the problem of homelessness, child labor, and suicides. Indeed, the Great Depression was an event that slowed down the growth and development of the United States to a considerable extent.

Works Cited

Bartels, Larry M. “Political Effects of the Great Recession.” The Annals of the American Academy of Political and Social Science, vol. 650, no. 1, 2013, pp. 47-76.

Cherlin, Andrew, et al. “The Effects of the Great Recession on Family Structure and Fertility.” The Annals of the American Academy of Political and Social Science, vol. 650, no. 1, 2013, pp. 214-231.

Riumallo-Herl, Carlos, et al. “Job Loss, Wealth and Depression during the Great Recession in the USA and Europe.” International journal of Epidemiology, vol. 43, no. 5, 2014, pp. 1508-1517.

Saint-Etienne, Christian. The Great Depression, 1929-1938: Lessons for the 1980’s. Hoover Press, 2013.

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