The Roaring Twenties and the Great Depression: A Historical Analysis

Political Landscape

The two political groups that dominated the assembly were:

• Girondins: Represented the interests of the bourgeoisie.
• Jacobins: Represented the laborer people and the sans-culottes.

The Roaring Twenties (1920-1929)

The year 1929 marked the end of an era of extraordinary economic prosperity in the United States known as the Roaring Twenties. This expansion resulted from increased demand during World War I and the post-war recovery.

Burgeoning Economic Growth

The expansion of the American economy was driven by a change in production dominated by technical innovation and changes in work organization, characteristic of the Second Industrial Revolution.

Consumer Revolution

A significant shift occurred in the systems of demand and supply.

Unequal Distribution of Income

While the overall population saw improvements in their living standards, company profits soared, and the increase in salaries did not keep pace.

The Great Depression (1929-1939)

The collapse of the New York Stock Exchange in 1929 triggered a series of events that led to an unprecedented economic depression.

Causes of the Great Depression

• Industrial Overproduction: Indicators of industrial activity suggested that growth was slowing in the US before 1929.
• Liquidity Crisis: A lack of monetary resources hindered the payment of debts.
• Fall in Consumption: Unemployment and the fear of worsening economic conditions led to a decline in consumption. Factors contributing to this decline included:
  • Decrease in purchasing power
  • Fear of job loss
  • Falling agricultural prices
  • Indebtedness from previous purchases of durable consumer goods
  • The belief that cheaper goods would be available in the future

The consequences of the Great Depression were devastating: 4,000 banks failed, millions of families were ruined, and countless individuals lost their life savings.

Keynesian Proposal

Economist John Maynard Keynes proposed that the government should increase public spending, particularly on public works, to stimulate the economy during times of crisis. Keynes argued that the role of capitalists was to invest, while the role of workers was to consume. He believed that by raising workers' salaries, consumption would increase, thus boosting the economy.

Roosevelt's New Deal

President Franklin D. Roosevelt adopted Keynesian ideas and implemented a plan known as the New Deal to mitigate the effects of the Great Depression. The New Deal aimed to combat falling prices and regulate production and prices.

Key Measures of the New Deal

• Agricultural Adjustment Administration (AAA): Established to support farmers and raise agricultural prices.
• National Industrial Recovery Act (NIRA): Created two agencies:
  • National Recovery Administration (NRA): Promoted price agreements between companies to prevent further price drops.
  • Public Works Administration (PWA): Supported large infrastructure projects to reduce unemployment and increase demand.