The Great Depression shaped economic theory, social life, and peoples Essay

The Great Depression shaped economic theory, social life, and peoples views of a market economy in general - Essay Example economy or had trades with them (us.history.com). This soon spread to almost every nation in the world. The Great Depression dealt one of the heaviest impacts in the economic stability of the United States. Unemployment rate and taxes went up while income, output and prices had dropped. Unemployment in the U.S. rose from 8 million to 15 million while the Gross National Product (which measures the output generated by a country’s enterprise) decreased from $103.8 billion to $55.7 billion. Farmers have had their struggles, since during that time a draught hit the Great Plains which also caused severe dust storm–this was known as the Dust Bowl or Dirty Thirties. When the stock market crashed, over $40 billion worth of investment was lost (us.history.com). Some banks which invested in the stock market were forced to close. Consequently, many people started withdrawing their savings causing more banks to close down. This eventually made over 5000 banks to fail. Without money to spend, more than 32,000 businesses went bankrupt. Due to the unemployment, crime rate and prostitution incidence went up. Many people became hopeless and depress contributing to the rise of suicidal rates and alcoholism. Mass migration took place almost everywhere. Farmers whose farms were ruined by Dust Bowl migrated to other states hoping to find work there (history1900’s.about.com). Herbert Hoover, who was president at that time, based most of his responses to the Great Depression in his firm belief of volunteerism. He declined direct federal relief payments as he believed it would lose the enticement of working. Hoover has had urged banks to form a consortium known as the National Credit Corporation. These banks are pressed to provide loans to small banks to prevent them from collapsing. He approved the Federal Home Loan Bank Act to spur new home construction and to reduce foreclosures in response to the numerous Hoovervilles (also known as shanty towns or tent cities)