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The Great Depression and Its Negative Effects on The United States

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The Great Depression had a negative effect on the social, political, and economic aspects in the United States (U.S). All of these effects impacted The U.S. heavily and also affected other countries during the process as well. There were three main effects and these were the Social, Political, and Economic effects. These effects had led the United States into a downhill battle.

The Great Depression had a lot of socially negative effects that impacted the United States tremendously. Most of the Social effects impacted farmers, families, and businesses such as banks and other corporate industries.

The first effect of the Great Depression discussed in this essay is unemployment, hundreds of thousands of people were unemployed during this time mainly due to the cost of no money and no jobs to work at. The percentage of unemployment in the United States went up to 25%. That means one out of every four people did not have a job, and most likely didn’t have any money or a place to live in.

Due to the fact that many people did not have any money, some of them went on to become small farm or landowners so that way they could grow their own food and support their families for free. During this time the people who were running farms were doing much better than the city dwellers.

During the Great Depression many people had gone bankrupt because of the Boom years. These years started a new era in the stock market. People went on to buy stocks and take out loans from the bank. But a few years later the Great Depression started up and this made many people go poor because they couldn’t afford to pay back the loans. All of this made people move out of their mid to upper class homes into lesser quality towns called Shanty Towns.

In 1920 the Boom years had started up. Many people took out loans to invest in stocks. America seemed to be at its best in late 1928. The impact of WWI was over. The “Roaring twenties” was what this time was called. Only four percent of the population was unemployed. Basically four out of every one hundred people didn’t have a job. This was an exciting decade to be alive and live in America.

During WWI more than half of the U.S population lived in the countryside. After the war was over, sixty percent of people moved to the cities. Here people could buy cars that were affordable to the middle class. Electricity and telephone lines were connecting more and more places together. Roads were popping up all over. People had jobs and were spending money. Banks were lending money to people with the “buy now, pay later” concept. People were buying vacuum cleaners, radios, and washing machines. The stock market was booming. People were paying for things on credit. People were also able to buy stocks with borrowed money.

In the 1920’s the value of stocks kept going up. It was a way of gambling for people. Even people that didn’t know anything about how the Stock Market worked wanted to try their luck at it. People without money wanted in on the stock market. So they borrowed money from the bank. By 1929 about half of the money that banks lent out were used to buy stocks. The most important place to buy and sell Stock was on Wall Street in New York City.

While everything seems to be booming around the country, the old saying of “what goes up, must come down” is about to happen. A day known as Black Thursday happened on October 24, 1929. On this day stocks began to fall and kept falling. When people saw the big drop off in stocks, they began to sell them all at once. This just made the prices fall even further. People were in panic mode around Wall Street because they thought they were going to lose everything. The panic resided by noon that day when a group of businessmen pooled all their money together and bought stocks at high prices. This had people hopeful that their stocks were safe. People were able to relax for a few days as prices came back up.

By Monday, just a few days after the prices went back up, they fell back down, and even faster than a few days ago. By Tuesday morning October 29, 1929 panic mode set back in Wall Street. This was known as black Tuesday. Everyone was selling stocks and losing money with every sale. Millions of dollars vanished in a blink of an eye.

Black Tuesday was considered the single worst day for the U.S economy. Bankers and businessmen would tell the public that the worst was over, and the Economy was still stable. People soon discovered what a fantasy they were living before the stock market crashed. The market boom was really only making a small amount of people money. Most people were borrowing and spending, and actually becoming more and more in debt. People who had bought stocks with borrowed money now have to pay it back, but they don’t have the money to do so. The middle class people were affected the most.

The people who had no money and who were homeless moved to these towns called Shantytowns. These towns could house thousands of people and also included “Unofficial Mayors.” These towns were dirty and filled to the brim with sickness. If there were multiple Shantytowns next to each other then they would be called Hoovervilles.

These Hoovervilles were made out of anything people could salvage. They would be made out of paper, sheet metal, cardboard, bricks, and scraps of wood. There were even buildings made out of bricks that were over 20 feet tall. People would stand in line all day and wait for a loaf of bread to bring back to their families. Times were tough and people were looking for a leader.

The Presidents during the Great Depression were Hoover, and Roosevelt. They had different ideas and opinions on how the country should be ran. Hoover believed that government regulation and involvement in business was harmful. He supported the natural process of supply and demand within a free market system. Like other capitalists, he believed competition was good, and that it would result in higher quality products at lower prices. However, President Roosevelt believed that the government existed to help everyone who needed it.

Hoover was shamed upon because most people thought that he did not do enough to help recover from the crisis, however it is not really fair to blame President Hoover for causing the Great Depression. He had been in office for less than eight months when the stock market crashed. Still, it was clear that something needed to be done. Most Economists believed the government should stand aside. It was sad that people were suffering, but if the Government were to try and fix things, it would most likely make the situation worse.

In some ways Hoover disagreed on the belief that the Economists had. It seemed clear to President Hoover that some help was needed to fix the so called “machinery of the country” back into its place. He asked business leaders to invest in projects that would strengthen the economy, not bring it down. But he didn’t think the government should pass laws to control businesses. He expected businessmen to do the right thing on their own without the Government getting in the way.

Hoover believed the Government should not give out money in charity. Instead by giving charity groups money he would give them advice. Hoover would also go on to fund some local projects that would give jobs to people. The most important was the Hoover Dam on the Colorado River. The Hoover Dam provided electric power and irrigation for the surrounding area. By building the Dam, Hoover gave work to over five thousand people. Over twenty thousand people applied hoping to get the job opportunity. Hoover strongly believed that cutting taxes would help the economy come back to life. He also arranged government loans to banks, insurance companies, and railroads. However some Critics say that Hoover was only helping the rich get richer

Hoover was guided by a very strong belief. The government should never offer money directly to people, no matter what the situation was. He believed that giving people money would strip away their independence and destroy the spirit that made America great. However he didn’t mind using government money to feed starving cattle because cattle was a business. But he said “no” to a plan that would pay to feed starving farm families because it wasn’t a business. That would have been considered a hand out in the government’s eyes.

Hoover believed that it was the job of private charities to give the poor people aid, and not the Government. In 1931 he announced that the Red Cross was available to help anyone in need. President Hoover insisted that nobody would go hungry or cold because of the Red Cross, but he was wrong.

At this point in time President Hoover was not the most popular person among the American people. In 1932 another crisis made Hoover even more unpopular to the public’s eye. Back in 1924 Congress had voted to pay a bonus to everybody who had fought in WWI. But the bonus would not be paid until 1945. The Veterans wanted the bonus money now. More than fifteen thousand Veterans and their families marched to Washington and set up camps while waiting to see if the Government would agree to pay the bonus money early. The Senate voted “No” for the early payment.

In Albany New York Franklin D. Roosevelt was the governor at this time. He didn’t like the path America was on. FDR wanted to help those in financial need. In New York FDR established the Temporary Emergency Relief Administration (TERA). This was a government run program. TERA made sure that people without jobs had enough money to live. This system worked well in New York and FDR wanted to see similar programs like this one throughout the United States. FDR was for helping the people of America. So he decided to run for president.

In November 1932 Franklin Roosevelt was elected president with a huge outcome of votes. He pledged a new deal for the American people. Big changes were on the way for America as soon as Roosevelt took office on March 4, 1933.

Roosevelt’s main focus for his first four months of office was the three “R’s”, Relief, Recovery, and Reform. Relief was the first to come for the people. “FERA” was the Federal Emergency Relief Agency. FERA offered job training and tried to create new jobs. It’s also gave money to people who needed it.

Closing down all banks was one of the first acts FDR did. He would close them all down and only reopen the ones that were stable. This regained the faith of the people. Recovery was the next step to restart the economy. The NRA (National Recovery Administration) was put into effect. A lot of businesses participated with this act. The NRA agreed on minimum wage, an end to child labor, and a limit on the number of hours people would work in a single day.

Roosevelt’s Reform Acts were meant to make sure that a Great Depression could never happen again. FDR would try and control the risks the banks were allowed to take. He would make sure that the Stock Market gave investors all information. Roosevelt created the Social Security Act in 1935. This would give money to workers after their retirement, and to those who were unemployed and who couldn’t work. To help support this Act, Roosevelt taxed the richest citizens.

By 1940 Roosevelt was running for his third term in office. The people seemed to like his ideas, and how he was trying to make America thrive again. His promise to America, to end the Great Depression is what got him elected for the third time as president.

As President Roosevelt was continuing his quest of ending the Great Depression, WWII had begun over in Europe. In 1939 with Germany, Japan, and Italy invading other countries it seemed impossible for America not to get involved in the war. Most Americans wanted to stay out of it. Roosevelt had no choice but to go to war when Pearl Harbor, located in Hawaii was bombed by Japan on December 7, 1941.

Ending the Great Depression meant jobs needed to be created. When the war broke out, unemployment vanished. Many men joined the Army. People were needed to build ships, airplanes, and weapons. Seventy Five thousand people worked at the Brooklyn Navy Yard repairing one thousand five hundred ships a year. Everyone had a job and was working. At this point there were more jobs than people working them.

In conclusion, as seen from the essay, the Great Depression was a very hard and trying time for America. The Stock Market fell and this left people with no jobs and no money. Banks fell apart and people owed more money on credit than imaginable. Even though President Hoover made an attempt at recovering the United States, It was President Roosevelt who broke the surface of bringing America back up on its feet again. Even though World War II was a terrible time for America, it created jobs that were needed to boost the economy, that ultimately put an end to the Great Depression.

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