This paper will briefly describe the characteristic features of the Great Depression, compare the approaches of Hoover and Roosevelt to the economic and social turmoil, and explain Roosevelt's New Deal responses to the crisis.
As a preliminary matter, the Great Depression was characterized by unprecedented levels of consumer debt, a decrease in international trade in the wake of the first World War, price deflation which compelled both individual and business debtors to cut spending while attempting to service higher than anticipated debt payments, a liquidity crisis which saw the money supply contract rather than expand, and a stock market crash as equity failed to yield anticipated returns (Bernstein, 1989: 33-35). In effect, stating the matter rather simply, money was disappearing on the income or loan side at the same time that debts and expenses were increasing. The consequences were disastrous. Unemployment increased, bankruptcies became commonplace, and huge migrations occurred as people sought new opportunities. There were too few resources for too many people; and where there were adequate resources; they were not allocated equally.
President Hoover failed to grasp the pervasive nature of the economic failings; on the contrary, rather than approaching the cri ...Show more