Piper Little

Mrs. Merriam

Economics

18 February 2022

Economic Change Essay

As long as basic human societies and civilizations continue to exist within the world, the

science of Economics will always exist as well. Economics can exist in the form of currency and

a free market or as a fair bartering system between neighboring villages or individual people. It

has been shaped and molded throughout time as countries have been formed, more resources are

discovered, and new ideas, schools, and philosophies grow and are expanded upon. Through

these many changes, the American economy has gone through many different changes that have

altered the way the citizens view certain topics pertaining to their money. Some of the most

drastic economic changes in American history have been the Great Depression, World War II,

and the rising national debt.

The Great Depression was an extreme economic change that lasted from 1929 to 1939.

This devastating major event led to very drastic changes in the American economy and how it

continued to function once it had passed. “The Great Depression was the worst economic

downturn in the history of the industrialized world” and it was caused by the Stock Market Crash

of 1929 when consumer spending and factory spending slowed, stock prices rose due to high

rates of inflation, and investors sold worthless shares en masse. Thousands upon thousands of US

citizens lost their jobs and went into debt when businesses were shut down or they were fired,

leading to foreclosures on their homes and barely enough money to feed themselves. By 1931, 6

million Americans could not find work and unemployment reached 24.9% in 1933
(Unemployment Rate by Year Since 1929 Compared to Inflation and GDP). In 1933, newly

elected President Franklin D. Roosevelt spent his first 100 days in office implementing new

policies and passing legislation through a plan called the “New Deal” in an attempt to create jobs

and stabilize the economy for a faster recovery. Along with creating the Federal Deposit

Insurance Corporation and the Securities and Exchange Commission to regulate the stock

market, Roosevelt created many new programs to supply permanent employment. The Works

Progress Administration, one of these programs, employed 8.5 million people from 1935 to 1943

(Great Depression History). The American economy didn’t fully recover until Roosevelt

announced that the United States would support Britain and France against the Axis Powers in

World War II.

While World War II was a devastating and bloody conflict caused by the Nazi Party of

Germany and its leader, Adolf Hitler, it also was the event that led to great economic change by

stimulating America’s economy and returning it to prosperity. Because demand for weapons,

materials, and labor for the war increased, the number of US citizens that were employed sky-

rocketed and the unemployment rate reached 1.2% in 1944, a record rate that was lower than it

had been before the Great Depression (The Post World War II Boom: How America Got Into

Gear). “17 million new civilian jobs were created, industrial productivity increased by 96%, and

corporate profits after taxes doubled” (The Way We Won: America’s Economic Breakthrough

During World War II). Black people and women began to join the workforce, taking jobs that

were typically held by white men. The war quickly made the American economy spring back to

its former glory and the effects of the Great Depression were soon no longer felt.

One final major economic change that has existed as long as the country has is the

national debt. The debt that has been amassed by the United States has been an issue in every
election to date since the birth of the country and continues to be prominent today. Every year,

the federal government tries to achieve its three main economic goals of stable prices, full

employment, and economic growth. It used various techniques to keep the economy stable that

have both positive and negative effects. For example, fiscal policy is used to lower taxes and

allow people to keep more money. However, because the people are spending less money, the

government has to counter this by spending and borrowing its own money, which, in the long

term, leads to a lot of debt. This debt that continues to be collected has four main consequences

that are passed off onto the American taxpayer: lower national savings and income, higher

interest payments, leading to large tax hikes and spending cuts, decreased ability to respond to

problems, and greater risk of a fiscal crisis (CBO: Consequences of a Growing National Debt).

Another thing that adds to the national debt is new government-run programs that politicians

endorse. Because of the fallen nature of man, many politicians don’t realize that advocating for

the policies and programs they want, such as student loan forgiveness, the Green New Deal, or

Medicare for All would dig the country even further into a mountain of debt because the

government has to pay for these programs with taxpayer money or money they don’t have.

The Great Depression was the greatest economic failure to ever occur in America, but it

taught an extremely valuable lesson surrounding inflation and abuses within the stock market

and helped politicians to pass legislation to ensure the economy would never fall as terribly as

that again. The Great Depression ended when World War II began and successfully reinvigorated

the American economy, vastly increasing demand for goods for the war, creating new jobs for

men, women, and blacks alike. The national debt, which has always been a part of the country

and continues to live on today, is a growing issue that the government tries to alleviate by using

many techniques to keep the economy stable while also using taxpayer money to pay it off
without sending the country into another depression. These many economic changes have shaped

the way that America handles its money and economy and will continue to do so many years into

the future.
 Works Cited

Amadeo, Kimberly. “Unemployment Rate by Year Since 1929 Compared to Inflation and GDP.” the

balance, 28 January, 2022, https://www.thebalance.com/unemployment-rate-by-year-3305506 

“CBO, Consequences of a Growing National Debt.” Committee for a Responsible Federal Budget, 21

July, 2014, https://www.crfb.org/blogs/cbo-consequences-growing-national-debt#:~:text=The

%20four%20main%20consequences%20are,ability%20to%20respond%20to%20problems 

Goodwin, Doris. “The Way We Won: America’s Economic Breakthrough During World War II.” The

American Prospect, 19 December, 2001, https://prospect.org/health/way-won-america-s-

economic-breakthrough-world-war-ii/ 

History.com Editors.“Great Depression: Black Thursday. Facts, & Effects.” HISTORY, 29 October,

2009, https://www.history.com/topics/great-depression/great-depression-history 

https://www.history.com/topics/industrial-revolution/industrial-revolution 

Pruitt, Sarah. “The Post World War II Boom: How America Got Into Gear.” HISTORY, 14 May, 2020,

https://www.history.com/news/post-world-war-ii-boom-economy#:~:text=On%20the%20home

%20front%2C%20the,low%20in%20the%20nation's%20history.