Great Depression

Definition

The Great Depression was a severe worldwide economic downturn that lasted from 1929 until the late 1930s, characterized by massive unemployment, declining industrial output, and a significant drop in consumer spending. This period had profound effects on the United States, prompting major changes in government policy and social programs, reshaping the role of the presidency in responding to economic crises.

5 Must Know Facts For Your Next Test

1. The Great Depression began with the Stock Market Crash of 1929, which wiped out millions of investors and severely damaged confidence in the U.S. economy.
2. Unemployment rates soared to nearly 25% at the height of the Great Depression, leaving millions of Americans without jobs and struggling to survive.
3. Franklin D. Roosevelt's New Deal introduced a range of programs that transformed the federal government's role in economic management and social welfare.
4. The Great Depression prompted significant changes in banking regulations, including the establishment of the Federal Deposit Insurance Corporation (FDIC) to protect depositors' savings.
5. International trade collapsed during the Great Depression, leading to protectionist policies like the Smoot-Hawley Tariff Act, which worsened global economic conditions.

Review Questions

• How did the Great Depression affect the role of the presidency in shaping economic policy in the United States?
  • The Great Depression significantly expanded the role of the presidency in American economic policy. Faced with unprecedented challenges, Franklin D. Roosevelt implemented the New Deal, which involved direct government intervention in the economy to provide relief, recovery, and reform. This marked a shift from previous presidential approaches, as it established the expectation that the federal government would take an active role in managing economic crises and supporting citizens during hard times.
• Analyze how Franklin D. Roosevelt's New Deal programs were responses to specific problems created by the Great Depression.
  • Roosevelt's New Deal was crafted as a direct response to the devastation caused by the Great Depression. For instance, unemployment relief programs such as the Civilian Conservation Corps (CCC) were designed to provide jobs for millions of unemployed Americans. Additionally, financial reforms like the Securities Exchange Act aimed to restore confidence in financial markets after widespread stock market abuses contributed to the initial crash. Each program targeted particular issues arising from the economic collapse, illustrating a comprehensive approach to recovery.
• Evaluate the long-term impacts of the Great Depression on American society and government policies into later decades.
  • The Great Depression had lasting effects on American society and government policies that extended well into future decades. It led to an enduring belief in the necessity of government intervention in economic affairs and established programs like Social Security that provided safety nets for citizens. The crisis also changed public expectations regarding federal responsibility for economic stability and individual welfare. These transformations laid foundational elements for later policy debates about government roles in addressing social issues and managing economic crises.

Related terms

New Deal:

A series of programs and policies enacted by President Franklin D. Roosevelt aimed at recovering the economy, providing relief to the unemployed, and reforming the financial system during the Great Depression.

Stock Market Crash of 1929: The dramatic collapse of stock prices that occurred in October 1929, marking the beginning of the Great Depression and leading to widespread financial panic and bank failures.

Economic Recovery: The process through which an economy rebounds from a recession or depression, often involving policies aimed at stimulating growth, creating jobs, and restoring consumer confidence.