Great Depression - Admission/Application Essay Example

Investors ignored warning until the stock market started crashing and investors started selling off their stock exchange holdings. The stock market crash was not only the reason that led to the Great Depression, but it was one of the main reasons. The first attempt to save the American economy during 1929 was made by President Herbert Hoover. The measures taken by the president includes: tax cuts during 1929, ordering of increase in the rate of construction by federal departments and signing of the Smooth Hawley Tariff.

Smooth Hawley Tariff was a legislation created to protect local American companies from competition of foreign companies. Hoover’s attempts to save the American economy showed that he believed that American economy can perform well if private businesses and government worked together. He named this activity as voluntary cooperation. These efforts helped in the economy and the American government thought that they have solved the problem and once again America was going to move towards prosperity.

But all these efforts became a total waste as the economy started deteriorating again. The American banks started closing as they faced liquidity issues and they were taken over by larger banks. The debt taken by foreign countries was not being paid back to the American banks due to Smooth Hawley Tariff and the plan of voluntary cooperation became a complete failure. Hoover started taking new steps to solve the issues faced by American economy. He believed that instead of giving money and food to the public, aid should be provided to corporations as it will help corporations stabilize and this will create employment and the final benefit will be gain by the public.

To promote his belief he created The Reconstruction Finance Corporation. Through this corporation, more than $2 million were lent to railroads, banks, institutions and farm mortgage associations. The problems faced by American economy did not seem to get solved until elections for new president took place. These elections were contested by Herbert Hoover and Franklin D. Roosevelt. The elections were won by Franklin D. Roosevelt and he was chaired as the new president of America. He came up with a plan to counter economic depression; this plan was recognized as the New Deal.

He started by creating various federal agencies recognized as NRA (National Recovery Administration), AAA (Agriculture Adjustment Administration). The first issue countered by the president was to stop the downtrend of the banking system. To solve this problem, Roosevelt announced a bank holiday and all the banks were closed for a period of 4 days. During this holiday, decisions were made regarding the shutting down of banks that were not fit to do business and providing a federal certificate of soundness to those banks which were fit to do business.

5% of the total banks were recognized as unstable to do business, the rest of the banks reopened after the holiday period. The president announced that banks were now stable and there was no threat to keeping money in banks. He stated “I can assure you that it is safer to keep your money in a reopened bank than under the mattress” (p. 119). When the banks re-opened, huge number of people re-deposited their money in their bank account and the New York Stock Exchange experienced an increase of 15% in its value in one particular day.

The president