Question

3. The Great Depression profoundly affected the lives of most Americans. The New Deal instituted policies to alleviate these effects. Discuss how the Great Depression affected the lives of the groups below and discuss the New Deal policies instituted to address the impact of the depression in these populations: (a) farmers; (b) industrial workers; (c) families; (d) the elderly .

Answer 1

The Great Depression is said to be the period in the 1930's, which was the result of a stock market crash and the subsequent events were such that the Aggregate Demand for goods and services across the globe began falling sharply. As a result producers cut back on their production capacity which previously was fuelled by the World War and ultimately had to fire people from work and unemployment across the global economy rose to an all-time high pegged at around 20-25% during this time period meaning that 1/4th of the population of a developed economy like the United States were unable to find a decent job for themselves.

The New Deal Policy, was a government spending program aimed to correct the effects of the Great Depression and was implemented by President Roosevelt who aimed to correct the impact that the economy was facing due to the deep crisis which had emerged.

The net impact on the three sections of the society in terms of both the Great Depression and the New Deal Policy has been described as follows: -

1) Farmers: -

During the World War, Farmers saw an increase in their production as demand for crops remained high during the period. But post this period when the Great Depression was just settling in, the demand for food grains was not that high as war related demand shrunk. The resultant was that farmers were unable to earn as much as they used to earlier. Post this, they increased their production even further so as to gain from per unit sales.

However, this resulted in a situation wherein the total production during the great depression, far exceeded the domestic and international demand for food grains. The net result of which was that food grains were available at dirt prices at which even the cost of production could not be recovered by farmers. As a result, may turned bankrupt while others had to face a tough time in managing themselves or they burnt the farm produce as they were not able to sell this and could not store the same for a long time.

Now, talking of the New Deal Policy, the government during that time felt, that decreasing prices were only because farm owners were producing in abundance which to a certain extent was true. To help ease the situation they encouraged farmers to reduce their production capacity for which they were given grants in exchange of the loss they would suffer as a result. The farmers were also given ample credit facility to be repaid in easy instalments which helped them in saving their lands on which they were cultivating food. Further, the government through the help of this program heavily invested in infrastructure development projects and irrigation facilities which transformed the farming sector and helped revive the economy as a whole.

2) Industrial Workers: -

The industrial workers were also impacted to a great degree and were a large part of the earning population during that time and were deeply impacted by the Great Depression. Earlier, due to the World War, industrial production had increased over a period of time. This however, began changing post war and the industrial workers lost their jobs and unemployment in the country rose to an all-time high of 20-25% aggregate.

A critical part of the New Deal Policy was to correct the depression by adjusting the wages for everyone including industrial workers. It established the National Industrial Recovery Act which was passed in 1933 as a means of providing stability to the industrial workers by regulating the minimum salary which they would get for the work they did in industries respectively. The end result was that industrial salaries began seeing a jump as they were controlled by the president and as income grew so did demand for goods and services. Further, the government themselves also started providing grants to people which would give them access to unemployment benefits such as Social Security and other health care reforms to safeguard the interests of industrial workers respectively.

3) Families: -

As described in the sections above, the domestic demand for goods and services were shrinking and families were seeing reduced income levels and poverty and unemployment in the country was rising. If the family consisted of producers, they were seeing reduced profits and if they comprised of middle-class working population, unemployment issues were constantly hitting them hard and they were seeing lesser income for themselves.

The government corrected all of the problems, by providing cheaper access to loans and helping farmers and other producers similarly. Other steps included direct transfer schemes and social security which guaranteed health care facilities to one and all and helped in reviving the economy using the New Deal Policy respectively.

4) The Elderly: -

Employers never wanted to hire elderly people during the crisis because of the fact that cheaper raw talent in terms of youth were readily available in the market place. This meant that up and over the existing industrial crisis, the elderly was discriminated upon by employers who found no reason to hire or rehire these sections of the society which then saw them earning very low income or none at all.

The New Deal Policy looked to correct the same, by providing benefits for the elderly in terms of grants which were introduced as per the same and retirement benefits for those above the age of 65 years. Pension plans were also part of the scheme and looked to give financial stability to the elderly respectively.

Please feel free to ask your doubts in the comments section.