Great Depression Essay

Sonora McHan

Brother Johnson

FDAMF Section 17

November 22, 2011

Free Market during the Great Depression

            The Great Depression was NOT caused by a failure of the free market and it was not resolved by government intervention.  In fact government intervention actually worsened the Great Depression greatly.  In recessions of the past the free market recovered after a year or two, but because of government intervention the Great Depression lasted for a whole decade.

            In Great Myths of the Great Depression by Lawrence W. Reed it says, “The calamity that

began in 1929 lasted at least three times longer than any of the country’s previous depressions because the government compounded its initial errors with a series of additional and harmful interventions.” The economy would have recovered if the government would have stayed out of it. Capitalism is a good thing, the myth that the government saved our country from the Great Depression is outrageous.

            It is a myth that Herbert Hoover had a laissez-fair approach to the economy. When the Great Depression began, Hoover took action. “During the campaign, Roosevelt blasted Hoover for spending and taxing too much, boosting the national debt, choking off trade, and putting millions on the dole. He accused the president of reckless and extravagant spending” (Lawrence Reed).  Does that sound like a “hands off” approach to you? Me neither, Hoover was definitely involved in the economy and so was Roosevelt once he became President.

            It is also a myth that the stock market crash caused the Great Depression.  Brother Johnson said in class that, “The stock market crash did not cause the Great Depression. The stock market crash was the first time that people realized that our economy was in trouble.” The crash was just the beginning of the Great Depression, but it did not cause it.

            When Roosevelt was President he created the New Deal. The New Deal was unconstitutional, and based on Roosevelt’s view of government intervention when he was a governor, he believed deep down that it was unconstitutional as well.  “We didn’t admit it at the time, but practically the whole New Deal was extrapolated from programs the Hoover started” (Economist, Roosevelt Brain-Trust, Rexford Guy Tugwell). Of course they didn’t admit it! It would have damaged Roosevelt’s policies and in the long run his Presidency. Under the New Deal there were such things as the Emergency Banking Relief Act of 1933, The Economy Act, Agricultural Adjustment Act, Federal Securities Act, and many more.  All of these programs were implemented in the first 100 days of Roosevelt’s Presidency, and most if not all of them were detrimental to the economy.

            There are enough facts to fill at least 20 pages as to why the free market was definitely not a cause of the Great Depression and why government intervention was. I have named a few of the extremely important ones. If the government would have let the free market thrive on its own, the Great Depression would have never happened. I am sure that the Presidents Hoover and Roosevelt thought that they were saving the economy, but in reality they were putting it in a hangman’s noose. Today the economy is approaching what it was in the 1930s. Our Government is interfering with the economy. Not only is this not helping anything, it is unconstitutional. Government should not be a part of the economy at all.