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Running Head: FEDERAL GOVERMENT AND THE GREAT DEPRESSION 2

FEDERAL GOVERNMENT AND THE GREAT DEPRESSION 2

The Federal Government And The Great Depression

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The Federal Government And The Great Depression

How Did the Federal government role change in the 1930’s?

One of the most severe economic crises in terms of its magnitude and the great losses it brought with it is the Great Depression which had its root source from the United States of America around the 1930’s. The federal government was in charge under President Herbert Hoover. It was during the aftermath of the second world war and the government was undertaking steps to ensure the recession of the economic world in the USA. Among some of the projects undertaken included increment of the federal reserve’s rate among other measures to increase the expenditure of the country. The federal government was therefore much more invested with ensuring stability of the employment market whereby it pleaded with the unions against asking for more pay and pleaded with the employers not to reduce their employee’s wages during the onset of the Great Depression. The government’s role therefore changed in a sense that president Herbert and his government prioritized on undertaking of community service projects e.g. construction and what a view as well as advocating for a spirit of self-help among the communities and the local government. It is for this reason that that the government incurred a lot of expenditure towards the bucketful completion of these reforms and projects and it is for this reason that the great depression menace kept on creeping even deeper among the Americans and to the rest of the world (NPR, 2008).

Under president Hoover’s administration, the federal government introduced a new form of insurance policy to the employees known as “old-age insurance”.as a result, the employee suffered considerable cuts on their wages which all went dutifully to this insurance plan. However, the government failed to inform the employees that the employers were also mandated to pay the exact amount of dollars that the employees paid to that insurance plan. The federal government had therefore enacted a policy which constituted that each employee was entitled to receive another insurance policy once he lost his job and the premiums of the new policy were to be paid wholly by the employer with the employee paying nothing. President Roosevelt who was the successor of President Herbert revealed all this in his speech and accused Hebert’s federal government of deliberate omission of this information .As a result, employees were faced with very many dues to cater for all in the name of insurance policies. As a result of these new financial polices undertaken by the federal government, there resulted a considerable increment in monopolistic businesses, unfair competition as well as decremental working conditions of the employees. The federal government was also against collective bargaining which resulted to increased exploitation and unfair treatment if the employees in their work places.by overfocusing on the financial policies to ensure reconstruction of the banking system, President Hebert and his federal government remained oblivious to the other major concerns of the American people including cheap transportation and electricity, low affordable interest rates as well as the rising number of the unemployed citizens (MILLER CENTER, 2017) .

In conclusion, the federal government under president Herbert was able to reconstruct the financial system by enacting measures which ensured increment of currency and gold to the banks in an attempt to increase the money in circulation. As a result of these measures , the government in a significant effective degree was able to mitigate the fall of the banking system and for this the federal government is applauded, however, the federal government also failed in a significant degree to ensure inclusion of racial diversity along its operations in 1930’s the federal government enacted a housing policy which majorly segregated the black population’s policy dictated that any housing built and financed by the federal government be racially segregated . The federal mortgages all excluded nonwhite citizens as its beneficiaries. Additionally, as a result of the employment practices taken up by the federal government, the black population was majorly discriminated in regard to employment opportunities. Only about 2%of the entire federal government task force was occupied by the black population. even the black population who held these jobs, their job security wasn’t in any way assured and faced vigorous competition from the white population which had lost their jobs (NORTON COMPANY, 2019).

What brought about these changes?

Additionally, the federal government’s role changed during the 1930’s as a result of the undermined public confidence in the banking system which resulted to a major decrement in the amount of money that the banks had in circulation. Majority of the public had approached the US banking systems with requests to convert their bank deposits into gold or currency. The banks adhered to these requests of course and as a result lacked enough money and currency by the banks to meet this demand and resulted to manor losses incurred by the banks since they had to sell their assets to convert them into ready cash at prices way below their real value.as a result the banks were closed and the federal government had to find an immediate solution to this issue hence the shift of their roles to incorporate more financial and economic functions.

As a result, the federal government headed by president Hebert undertook measures to ensure rehabilitation of the banking system which included giving the banking systems a nation-wide holiday, the Congress approved legislation to ensure extension of the holiday as well as providing regulations which limited the banks operations to mere distribution of food and related necessities as well as payment of payrolls. The federal government was able to use the opportunity created by the bank’s holidays to undertake projects to ensure currency supply in order to meet the risen situation.

Additionally, the federal government was able to use their federal reserve banks to issue additional currency on the good assets to the respective banks who owned these assets thereby enabling faster re-opening of the banks to perform all its mandated functions. This resulted to major currency printing by the state. additionally, the federal government designed a banks-re-opening process which included the re-opening of the major banks first and the resumption of the functions followed by the re-opening of the much smaller banks in order to allow the banks enough time to apply for the necessary loans as well as access the necessary currency needed.as a result, the federal government was able to readjust the state’s financial system as well as increment and restoration of the Americans confidence and courage in the banking system (MILLER CENTER, 2017) .

REFERENCES

MILLER CENTER. (2017, April 26). October 31, 1936: Speech at Madison Square garden. Miller Center. https://millercenter.org/the-presidency/presidential-speeches/october-31-1936-speech-madison-square-garden

MILLER CENTER. (2017, April 26). March 12, 1933: Fireside chat 1: On the banking crisis. Miller Center. https://millercenter.org/the-presidency/presidential-speeches/march-12-1933-fireside-chat-1-banking-crisis

NORTON COMPANY. (2019, October 1). Give me liberty! Home Page | W. W. Norton & Company. https://wwnorton.com/books/9780393418040

NPR. (2008, October 27). In 1932, depression was campaign centerpiece. NPR.org. https://www.npr.org/templates/story/story.php?storyId=96187958