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Why was there a second depression in 1938?

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SFK&&QAQ | Student, Undergraduate | Salutatorian

Posted February 25, 2013 at 1:46 AM via iOS

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Why was there a second depression in 1938?

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rrteacher | College Teacher | (Level 1) Educator Emeritus

Posted February 25, 2013 at 3:37 AM (Answer #1)

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The answer to this is debated, with some critics of the New Deal arguing that the economic downturn of 1937-38 was a result of the inflationary monetary policy pursued by the federal government in response to the Great Depression. At the time, many business leaders blamed what they called the "anti-business" stance of the federal government under Roosevelt, notably the numerous regulations imposed on businesses during the period. Many on the left at the time pointed out that while large industries had indeed seen new job growth, they had not raised raised wages even as industrial and consumer prices (which had collapsed in the early years of the Depression) had risen. This compromised the spending power of consumers. The mainstream view by economic historians, however, is that spending cuts to many of the New Deal programs helped contribute to the setback.

Source: Alan Brinkley, The End of Reform: New Deal Liberalism in Recession and War (New York: Vintage Books, 1996)31-32; 48-49.

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