What were the positive effects of The Great Depression?

This article will discuss what were the positive effects of The Great Depression. For that, the article will explain what was The Great Depression, and what caused it.

What was The Great Depression? 

The Great Depression was the confluence of many factors that led to an economic downturn that impacted most of the world. It started in 1929 and lasted until 1939. It causes many economic, political, and societal changes, some positive, but also some negative ones.

The Great Depression began in the United States, but it went on to affect all the countries in the world. It started in America that was going through a recession up until the summer of 1929. And as people started to change their spending habits, it led to an even worse situation, The Great Depression.

The Great Depression brought many impacts to people’s lives, there was a decline in sales, high rates of unemployment, and a huge deflation in almost every country in the world. But it affected areas of the world at different levels, although it was long and severe in the United States and Europe, it was milder in Asia and Latin America. 

But let’s understand a little more about what caused The Great Depression.

What caused The Great Depression? 

The Great Depression was caused by many factors that impacted, not only the economic scenery to that large extent, it had a political effect, and also an effect on society. The first economical impact was the market crash in October of 1929. Which affected the confidence people had in the American economy. 

When the market crashed, meaning people started to sell their stocks because they were afraid of losing money, people changed the way they handled their spending habits. Those who had money at the bank just took it out, and people started to save their money, instead of investing or buying goods as people were doing before. 

Because people were taking their money out of the banks, and others weren’t able to pay their loans with the banks, because they were now unemployed, banks started to panic at the beginning of the 1930s. Some of them even closed because of the lack of money, and because there was no possibility of making new loans.

Another matter that caused The Great Depression was the gold standard. This process connected central banks of many countries to organize the monetary exchange between them. So because of this connection, The Great Depression expanded all over the world.

The Great depression had some positive effects on the future of economics, politics, and social life. Let’s discuss what they were

What were the positive effects of The Great Depression? 

Although it may seem that The Great Depression had so many negative effects, it also had some positive things that were taken from it. Let’s discuss what were the positive effects of The Great Depression.

Positive effects on economics 

Going through events such as The Great Depression put in the mind of people and governments that something needs to be done to prevent it from happening again. So as a result of it, there were many changes in the banking business.

Because many banks closed due to the lack of money flow, and in their closing, people lost a lot of money, the American congress created the Glass-Steagall Act in 1933. 

This act created the rule that banks should have a Federal Deposit Insurance Corporation (FDIC), which makes each bank have insurance to guarantee that if the bank closed, people that had money in it, would be able to retrieve their money.

Positive effects on Labor Laws

Since The Great Depression caused a high rate of unemployment, after it ended, during the 1940s many new labor laws came in to guarantee the rights of the workers. It established a 40-hour work-week.

Aside from that, another beneficial change that The Great Depression brought, was the setting of a minimum wage. And because during that time many children started to work to help their family survive, a new law set, as soon as The Great Depression was over, that child labor was a crime.

Positive effects on social life

To handle The Great Depression, the American government created a program called The New Deal. To create that, it turned alcohol, which up until that point was illegal, into a legal product, to charge taxes on it. And with the government money, they created many public jobs to try and positively impact the economy.

They offered jobs in creating public buildings, airports, and even whole cities. Aside from this governmental help, the American government also approved The Social Security Act in 1935. This act discussed how people over the age of 65 receive a monthly income to implement the income they made through their labor.

The Security Act also granted many unemployment benefits to people that lost their job due to The Great Depression and was responsible for disability benefits, public housing, and mortgage protection.

With all of this, it is possible to say that, even though The Great Depression caused enormous suffering to people, it was also a chance for governments to improve their laws and guarantee the well-being of their citizens that were so badly affected by this huge crisis.

Being aware of all these positive effects can be important since another crisis can always happen, but handling it, and getting out of it needs to be a joint effort of governments and people.

Frequently Asked Questions (FAQ): What were the positive effects of The Great Depression? 

Was the New Deal responsible for ending The Great Depression?

The New Deal was a package of governmental programs that focused on trying to improve the economy and social well-being that had suffered a great deal due to The Great Depression. This program went on changing a lot of how America worked.

But although it had many positive effects, it wasn’t the sole reason why the Great Depression ended. Although the program offered many jobs to people that were, up until that moment, unemployed. Offering them a chance to work in the construction of public buildings, and even entire cities, wasn’t enough.

What had a definite impact in ending The Great Depression was the beginning of World War II. When it started, it created a demand for massive production of weapons, and all war-related materials, which created a lot of jobs, causing The Great Depression to end. 

Were there people that benefited from The Great Depression?

Yes, although it seems hard to believe, some people got even richer due to t

The Great Depression. That is the case with the movie star Mae West. Before The Great Depression, she was a burlesque dancer, but as the crisis went on, the need for cheap entertainment only grew.

And she became one of the most known actresses, starting in her first movie in 1932 at age 39. She was first booked to do a movie by Paramount studio called She Done Him Wrong, and it was so positive, that even the studio that was about to be bankrupt made a fortune out of it. 

By the middle of the 1930s, the actress was making a fortune in movies and became the highest-paid woman, and entertainer in the country. Along with her, Charles Clinton Spaulding also made a fortune during The Great Depression.

He was hired to preside over a company that focused on insurance during The Great Depression. But at that time, the company was almost bankrupt. He used his knowledge of sales and marketing to create new lines of insurance, such as fire insurance, banking, and mortgage lines. 

He was seen as the leading black man in business in America and saw the company he was working on grow. Michael Cullen was also someone that got richer during the Great Depression. Before it, people would usually buy their groceries from corner stores that had limited amounts of products.

But when The Great Depression hit, he proposed that the company he worked for, Kroger Grocery, started to change the way they sell things. Seeking things at a discount price, is a type of self-service store, with parking to accommodate the many cars people were getting.

But as the store he worked from ignored his proposal, he went on to open his own business and changed how supermarkets were seen across America. And finally, Howard Hughes was someone that saw his fortune grow during The Great Depression. 

He became a millionaire by inheriting his father’s fortune when he was 18. And since he had an oil company, some of his money came from that. But not only that, he became a famous Hollywood film producer. During The Great Depression, he focused on aviation, creating an aircraft company.

That became one of the most profitable aircraft manufacturers in the world, which managed to turn the aircraft into military ones during the World War II period.

Did The Great Depression affect the habits we have nowadays?

Yes, although nowadays The Great Depression doesn’t seem to have a huge impact on our lives, some changes that it generated are extremely important until now. The relationship between workers and employed was completely altered due to The Great Depression.

Employees had a better notion of what their rights were, and from that moment on can stand up for themselves easier. It set the 40-hour workweek, established that people had the right to vacation days, and even that children were not allowed to work, something that happened commonly during The Great Depression. 

Did The Great Depression change how banks work?

Yes, The Great Depression had a huge effect on how banks and financial systems work. Because of it, banks had to take in insurance to guarantee that they would have the funds to give everyone’s money back if they ever wanted it. 

Not only that, credit lines became harder to get. Back then, people could get it everywhere, any amount they wanted, which caused people to have a false notion that there would always be money available, but with the crisis, it became clear that the banks and people needed to handle credit lines more efficiently.

Was The Great Depression all bad?

No, The Great Depression wasn’t all bad. As with any other event in life, going through it had its difficult moments. The poverty, despair, and fear it brought were real. Many people lost everything they had ever worked for. 

But those difficult times also allow people and governments to rethink and set new goals and actions. Many changes generated from The Great Depression are still present in our lives and certainly have made it better.


This article explained what were the positive effects of The Great Depression. For that, it showed what The Great Depression was, and what caused it.

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