Great Depression

Definition

The Great Depression was a severe worldwide economic downturn that lasted from 1929 until the late 1930s, characterized by widespread unemployment, plummeting stock prices, and significant declines in industrial production and consumer spending. Its effects were felt across various sectors of society, and it led to substantial changes in economic policies and government intervention in the economy.

5 Must Know Facts For Your Next Test

1. The Great Depression began with the Stock Market Crash of 1929, which resulted in a loss of billions in stock market value and triggered a chain reaction of bank failures and business closures.
2. Unemployment rates soared during the Great Depression, reaching as high as 25% in the United States, with millions of people struggling to find work and support their families.
3. The global nature of the Great Depression meant that countries around the world experienced similar economic challenges, leading to decreased international trade and increased protectionism.
4. The Federal Reserve's failure to act effectively during the initial stages of the Great Depression contributed to its severity and duration, as deflationary policies worsened economic conditions.
5. The Great Depression fundamentally changed the relationship between government and the economy, leading to increased federal intervention and the establishment of social safety nets like Social Security.

Review Questions

• What were some immediate economic impacts of the Great Depression on American society?
  • The immediate economic impacts of the Great Depression included skyrocketing unemployment rates, which reached around 25%, resulting in widespread poverty and suffering among American families. Many businesses closed their doors due to financial strain, while banks failed, wiping out savings for countless individuals. These hardships led to significant changes in how society viewed government responsibility for economic welfare.
• How did the New Deal aim to address the challenges posed by the Great Depression, and what were its key components?
  • The New Deal aimed to address the challenges of the Great Depression through a series of innovative programs focused on relief for those suffering, recovery for the economy, and reform of financial systems. Key components included job creation programs like the Civilian Conservation Corps (CCC), financial reforms such as the establishment of the Securities and Exchange Commission (SEC), and social safety nets like Social Security. These initiatives represented a shift towards greater government involvement in economic affairs.
• Evaluate the long-term consequences of the Great Depression on American economic policy and society as a whole.
  • The long-term consequences of the Great Depression reshaped American economic policy and societal norms significantly. The crisis led to an enduring belief in the necessity of federal intervention during economic downturns, establishing a precedent for future government action in times of financial distress. It also fostered a stronger social safety net through programs initiated by the New Deal, which continue to influence policy discussions today. Additionally, it altered public attitudes towards government accountability in managing economic stability.

Related terms

Stock Market Crash of 1929: A dramatic decline in stock prices that occurred in late October 1929, marking the beginning of the Great Depression and leading to widespread financial panic.

New Deal: A series of programs and policies implemented by President Franklin D. Roosevelt in response to the Great Depression aimed at providing relief, recovery, and reform to the struggling American economy.

Dust Bowl: A severe drought that affected the Great Plains during the 1930s, exacerbating the economic hardships of the Great Depression and displacing thousands of farming families.