The Great Depression - Unemployment and Taxation

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The Great Depression

The worst economic downturn ever recorded was the Great Depression. The Great Depression began in 1929 and ended in 1939. (Madhusudhan 35). It started in the US and then expanded to other nations. Several things contributed to the Great Depression. First, the 1929 stock market collapse reduced consumer spending, which in turn contributed to widespread unemployment. (Madhusudhan 35). Panics in the stock market, which caused investors to race to sell their securities, set off a series of events that eventually resulted in the depression. Second, the UK made the decision to end the Gold Standard System, which slowed down its economic expansion. To reverse that effect, it increased interest rates on its investments. This led to the investors disposing their investments in the U.S for better prospects in the U.K (Madhusudhan 36). This culminated in the stock market crash. Thirdly, banking panics led to money hoarding in the economy which resulted in a decline in economic growth. This is because banks did not have the necessary funds to lend to potential investors. Many banks collapsed within that period. The fourth factor was the reduced rate of international trading that began in 1928 that led to the decreased global productivity (Madhusudhan 36). The Roosevelt administration aimed at restoring the welfare of the American citizens during the Great Depression by creating employment and redistributing the country's wealth. This is an analysis of how Roosevelt expanded the mandate of the federal government during this period and whether his efforts resulted in more efficient wealth distribution.

The New Deal

After his election, Roosevelt created the New Deal which aimed at helping the United States citizens in overcoming the challenges they faced during the great depression. He was elected during the 1933 elections (Walton and Rockoff 430). He immediately launched the New Deal that focused on relief, recovery, and reforms. It aimed at restoring the country's dignity and prosperity through its programs and projects. One of the agendas of the New Deal was to reduce the unemployment rate in the economy (Walton and Rockoff 430). This was achieved through the Civilian Conservation Corps which created employment for the young people. The government also came up with the Work Progress Administration that aimed at employing the citizens. The Work Progress Administration came up with projects that provided jobs to the unemployed population like creating roads. It also created employment opportunities in the art industry.

Wealth Redistribution

The government decided to increase tax rates for the high-income earners to redistribute wealth. It had three tax initiatives which were used to redistribute wealth. The first initiative was to create graduated tax rates for companies. The government also imposed a graduated tax rate on the undistributed profits made by corporations (World History part 5). A limit was also set for the individual income tax rate. The rich were to pay higher taxes as compared to the poor (Brownlee 121). This is because most people in the country were poor. It also imposed taxes on gasoline and other commodities like liquor (Brownlee 121). The government's second initiative was to increase the tax rate on payrolls which was intended to fund the Social Security System. The third initiative was to raise taxes on food processing. This was done through the Agricultural Adjustment Act (Brownlee 121). This increased the consumption taxes.


In conclusion, the Roosevelt New deal offered relief to the people. The government was concerned with restoring the country's wealth, and they did this by creating jobs for the unemployed. Provision of employment helped the poor in the society. It also redistributed the country's wealth through its tax initiative. This increased social welfare during the Great Depression. In my opinion, the evidence points out that Roosevelt expanded the role of the government and helped spread the national wealth to its citizens.

Works Cited

Brownlee Elliot. Federal Taxation in America, 2016, Cambridge University Press.

Madhusudhanan S. The Great Depression – Revisited, 2014, Journal of Business & Economic Policy Vol. 1, No. 1; June 2014. Pp.35-38.

Walton Gary and Rockoff Hugh. History of American Economy, 2013, Cengage Learning.

World History. Revenue Act of 1935, 2015, Accessed on 6th of December 2017

June 26, 2023

History Economics

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