The Great Depression: Ending the Depression in America


Figure 1.--

Both urban and rural Americans of course suffered during the Depression. While the New Deal brought relief to many desperate Americans and initiated important reforms (Social Security, labor reform, and agicultural advances), the Depression lingered on. And reductions in unemplyment were reversed in the Roosevelt recession (1937-38). The Congressional mid-term election of 1938 essentilly ended the New Deal and the Depression was not yet ended. The NAZI remilitarization and agression in Europe generated defense orders. Orders for war material from Europe began to flood into America. The Allied (Britain and France) response to the NAZIs was belsted, but began to impact America (1938). When Hitler and Stalin launnced World War II by invading Poland (September 1939), European orders reached an unprecedented level. This and increased American defense spending set the Arsenal of Democracy in motion. This finally created jobs that temporarily ended unemployment and the Depression. The Japanese carrier attack on Pearl Harbor. Congess which had so severely limited defense spending suddenly approved spending at uprecedented levels. Suddenly unemployment was no longer a problem, finding workers for the war indudtries, including many new factories, was the main problem. America turned to women and youth to replace the wokers conscripted for military service. The resulting Arsenal of Democracy was key to winning the War. American indudstry exceeded all expectations, including the American military, America's allies, the Soviets, and the Axis. American industry not only equiped its own military, but that of its allies as well through Lend Lease. Many modern liberals are under the impression that the New Deal ended the Depression. This is simply not true. We do see many accounts of the Depression that recognize the role that World War II and war industries played in generating employment and economic recovery. The story did not, however, end there. War was not a permanent end to the Depression. When the War ended, the United States was faced with a massive war debt. At the end of the War II, the U.S. Government’s debt had grown from $22 billion in 1933 to nearly $260 billion in 1945. Thst may not seem like a large amount today, but it was a huge amount in constant (inflation adjusted dollars). War spending far exceeded New Deal spending. Some 80 percent of the expanded debt was war spending. The problem at he end of the War was that as the war plants closed and expanded agricultural production was no longer needed, unemployment would grow and other Depression conditions would return. And unlike the Federal Government's financial position in 1933, continued massive borrowing was no longer possible. What finally brought America out of the Derpression was growth the same growth that had created American industry in the late-19th and early-20th century. In essence turning loose the same capitalist enrrgies that created the Aesenal of Democracy. The end of demonizing business was a factor. Another factor was all the new technologies that had been developed during the War. American industry turned them into whole new industries (nuclear, jet aircraft, computers, microwaves, tranistors, telelevision, medical advances, and much more). This was all in sharp contrast to Britain which had developed many of the new technoilogies, but was more interested in creating a socislist economy. Expanding an excellent education system as well as improving access to university education was another factor. And expanding opportunities for women began in the World War II emergency was another factor. The result was not only a dynamic economy, but Goivernment revenue that vhelped pay doen the nation debt. The Kennddy tax cuts helped to further the economic growth.

Cointinuing Depression

Both urban and rural Americans of course suffered during the Depression. he Depression was aleady nearly 4 years old wjhen President Roosevelt took office. And rather thn getting better, conditions were deteriorating. While the New Deal brought relief to many desperate Americans and initiated important reforms (Social Security, labor reform, and agicultural advances), the Depression lingered on.

Roosevelt Recession (1937-38)

And reductioins in unemplyment were reversed in the Roosevelt recession (1937-38). There is a popular myth that President Roosevelt ended the Depression and solved the unemployment proble, We hear Congressmen and other talkibng heads commonly expressing this opinion in TV intervon television. There is no doubt he want to and enacted program after program backed by massive defecit spending to do so. In fact he failed. The Roosevelt Administration which took office in 1933 did made substantial economic progress, although the statictics can be and often are manipulated for partisan purposes. Considerable economic growth was achieved. GDP growth averaged an impressive 9 percent. This was, however, from the severly dressed levels that existed when the President assumed office. The New Deal also reduced unemployment from from 25 to 14 percent, although a substantial part of that employment increase was Government jobs programs like the Worls Progress Administration (WPA).

End of the New Deal (1939)

The Congressional mid-term election of 1938 essentilly ended the New Deal. The Democrats retained control of Congress, but the Republicans gained seats in both the House and the Senate for the first time since 1928. And conservative Democrats retained their seats. As a result, President Roosevelt decided not to offer any new liberal programs in his State of the Union address (January 1939). Instead he concentrated on the threat that aggressor nations were posing to international peace. And the President and First Lady began to focus on life after the presidency. The United states at the time had a tradition of two term presidencies set by none other than President Washington. It was a tradition and not a legal requiremnt, but the Roosevelts and Washington political establishment began to prepare for the 1940 election and a new president. In the end, it wou;d be the War and not the New Deal that ended the Depresion . And the Presudent's focus changed entirely from liberal activism and Dr. End the Depression to Dr. Win the War. Mrs. Roosevelt continued to chmapion liberal causes, but for the President opposing the Axis dictatorsbecane his mission. In the end it would be NAZI dictator Adolf Hitler that would keep President Roosevelt in office. The stunning NAZI victory and the fall of France also shattered the Three Term prohibition. The American people decided they wanted a steady hand on the helm. To Mrs. Roosevel's surprise and disappointment, she and her husband were not going anywhere.

World War II: The Arsenal of Democracy

The NAZI remilitarization and agression in Europe generated defense orders. Orders for war material from Europe began to flood into America. The Allied (Britain and France) response to the NAZIs was belsted, but began to impact America (1938). When Hitler and Stalin launnced World War II by invading Poland (September 1939), European orders reached an unprecedented level. This and increased American defense spending set the Arsenal of Democracy in motion. This finally created jobs that temporarily ended unemployment and the Depression. The Japanese carrier attack on Pearl Harbor. Congess which had so severely limited defense spending suddenly approved spending at uprecedented levels. Suddenly unemployment was no longer a problem, finding workers for the war indudtries, including many new factories, was the main problem. America turned to women and youth to replace the wokers conscripted for military service. The resulting Arsenal of Democracy was key to winning the War. American indudstry exceeded all expectations, including the American military, America's allies, the Soviets, and the Axis. American industry not only equiped its own military, but that of its allies as well through Lend Lease.

Harnessing Free Market Capitalism

Hitler launched the long-awaited Western offensive (May 10). President Roosevelt had hoped that the Allies would be able to stop the Germans with American material support. The Deutsche Wehrmacht proved him terribly wrong. Within only 5 days the Netherlands surrendered (May 15). And the Dutch Army at the time was about the same size as the U.S. Army. General Marshal told President Roosevelt that if the Germans landed five division in America, there would be nothing that the U.S. Army could do to stop them. Belgium surrendered 2 weeks later (May 28). The Belgians who had effectively resisted the German at the start of World War I, surrendered 2 weeks later (May 28). At the time the British and French were attempotung to escape the German Panzers at Dunkirk. At first it looked like few of the men could be brought off the beach. In that enviroment, President Roosevelt picked up the phone and made certainly the most important telephone call of the War. And he made it to a very unlikely person--Willian Knudsen. Knudsen was an ardent Republican who had vocally opposed the President for 8 years and the very embodiment of the individuals who the President had called 'economic royalists'. To the credit of both men, the put aside partisan differences and cooperated to save not only America, but the the Free World as well. The United States had the greatest industrial potential of any country. But potential had little practical meaning in the current crisis. American industry was not geared for war. The United State was not even manufacturing tanks despite what had transpired in Europe. And there was not realistic plan for converting American industry for war. Nor was there any expertise in Washington for beginning the effort. This is why Roosevelt called Knudsen. And the team of other Roosevelt-hating Republicans that Knudsen put together accomplished the most remarkable industrrial trnsformation in history. By the times Japanese bombs fell on Pearl Harbor, American arms production had equaled that of NAZI Germany--and that was just the begginning of an American industrial tidal wave which would overwealm the Axis.

Misconceptions

Many modern liberals are under the impression that the New Deal ended the Depression. This is simply not true. We do see many accounts of the Depression that recognize the role that World War II and war industries played in generating employment and economic recovery. The story did not, however, end there. War was not a permsanent end to the Depression.

National Debt

When the War ended, the United States was faced with a massive war debt. At the end of the War II, the U.S. Government’s debt had grown from $22 billion in 1933 to nearly $260 billion in 1945. Thst may not seem like a large amount today, but it was a huge smount in constant (inflation adjusted dollars). War spending far exceeded New Deal spending. Some 80 percent of the expanded debt was war spending. The problem at he end of the War was that as the war plants closed and expanded agricultural production was no longer needed, unemployment would grow and other Depression conditions would return. And unlike the Federal Governmenh's financial position in 1933, continued massive borrowing was no longer possible.

Economic Growth

What finally brought America out of the Depression was economic growth, the same groth that had created American industry in the late-19th and early-20th century. In essence turning loose the same capitalist enrrgies that created the Aesenal of Democracy. The end of demonizing business was a factor. Another factor was all the new technologies that had been developed during the War. Ameican industry turned them into whole new industries (nuclear, jet aircraft, computers, microwaves, tranistors, telelevision, medical advances, and much more). This was all in sharp contrast to Britain which had developed many of the new technoilogies, but was more intent on creating a socialist economy. Expanding an excellent education system as well as improving access to university education was another fsctor. And expanding opportunities for women began in the World War II emergency was another factor. The result was not only a dynamic economy, but Goivernment revenue that vhelped pay doen the nation debt. The Kennddy tax cuts helped to further the economic growth.





CIH -- The Depression







Navigate the CIH Depression Section:
[Return to Main Depression page]
[Return to Main Civil Rights page]
[About Us]
[Introduction] [Biographies] [Chronology] [Climatology] [Clothing] [Disease and Health] [Economics] [Freedom] [Geography] [History] [Human Nature] [Ideology] [Law]
[Nationalism] [Presidents] [Religion] [Royalty] [Science] [Social Class]
[Bibliographies] [Contributions] [FAQs] [Glossaries] [Images] [Links] [Registration] [Tools]
[Children in History Home]





Created: 4:45 AM 7/19/2018
Last updated: 4:45 AM 7/19/2018