Great Depression in the United States
The Great Depression began in August 1929, when the United States economy first went into an economic recession. Although the country spent two months with declining GDP, it was not until the Wall Street Crash in October 1929 that the effects of a declining economy were felt, and a major worldwide economic downturn ensued. The stock market crash marked the beginning of a decade of high unemployment, poverty, low profits, deflation, plunging farm incomes, and lost opportunities for economic growth as well as for personal advancement. Altogether, there was a general loss of confidence in the economic future.
New Deal
Lowell E. Gallaway and Richard K. Vedder argue on the basis of Austrian School of economics theories that the Great Depression was caused by wages being too high which they say had caused a loss of depositor confidence which caused the bank runs. They further conclude that the "Great Depression was very significantly prolonged in both its duration and its magnitude by the impact of New Deal programs". They suggest that without Social Security, work relief, unemployment insurance, mandatory minimum wages and without special government-granted privileges for labor unions, business would have hired more workers and the unemployment rate during the New Deal years would have been 6.7% instead of 17.2%. Amity Shlaes wrote that "from 1929 to 1940, from Hoover to Roosevelt, government intervention helped to make the Depression Great". Shlaes said that the NRA was misguided because it used price setting to fix monetary problems. According to Shlaes, Roosevelt's experimentation frightened business into inaction and prevented recovery. Eric Rauchway showed that Shlaes tried to diminish the economic growth by referring to the unrepresentative Dow Jones Industrial Average. He continued that usually a historian or economist would have referred to the gross domestic product, which according to the Historical Statistics of the United States grew impressively by 9% annually during Roosevelt's first term and by 11% annually after the short recession of 1937–1938.