New Deal Analysis

The new deal was successful in reforming many of the problems that led to the great depression. One of the actions that helped the depression to grow was the crash of the stock market. The attitude of the 1920's was one of market speculation. People bought stock, which increased it's value, making more people invest in it. This led to artificially high stock prices, and when the bubble burst, the whole market collapsed. One of the reasons the market crash affected the economy was margin buying, where stock is bought on credit. This made many lose the borrowed money and unable to pay it back. Banks who had loaned the money to the investors lost the money that was to be paid

back. This led to the failure of many banks. The New Deal reformed this by making margin buying stricter, so that banks and other institutions that offer loans would be protected. Also, due to the bank failure, banks became insured by the FDIC so that the people who had money in banks were guaranteed that it would stay safe. The government did this so the people would regain their trust in the bank system, and put more money in the bank. Other organizations were also formed to reform various aspects of the country. These included the so-called alphabet reform agencies, named for all of their initials. The Securities and exchange commission was formed to regulate the stock market and enforce the laws that were passed. This was done to prevent another stock market