The Great Depression: America in Crisis, 1929–1941

the great depression

-“A nation that seemed unstoppable in the 1920s suddenly hit bottom”

-Duration: roughly 1929–1941 (ends with WWII mobilization)

-Key Themes:

• economic collapse

• human suffering

• government response

• national recovery

Economic Collapse

-stock market crash of 1929 → not the sole cause, but the spark

-Investors lost confidence; banks closed ; businesses failed

-National income cut in half by 1932

-Unemployment reached 25% of the labor force

Causes of the Great Depression

-overproduction of goods: factories & farms produced more than consumers could buy

-Uneven distribution of wealth: few held most wealth, little consumer spending power

-Easy credit & speculation: buying on margin created fragile financial system

-weak banking system: no deposit insurance; banks invested customer money in stocks

-Global economic issues: war debts & tariffs (like Smoot-Hawley) slowed trade

• Smoot Hawley Tariff: intended to protect American industries and agricultural interests from foreign competition, but actually hurt trade relations globally

The Banking Crisis

-1930–1933: 9,000 banks failed

-People rushed to withdraw savings (“ bank runs”)

-With no Federal Deposit Insurance Corporation (FDIC), millions lost life savings

-confidence in financial system shattered

Business Failures & Unemployment

-By 1932, 1 in 4 workers unemployed

-Factories closed; demand for goods collapsed

-Wages cut for those still working

-Unemployment hit hardest in cities dependent on single industries

Struggles on the Farm

-Farm prices dropped over 50%

-Many farmers couldn’t pay mortgages → foreclosures common

-Drought in Great Plains → Dust Bowl beginning mid-1930s

-Thousands of “Okies” migrated west seeking work

Human Impact: Life in the Depression

-Families lost homes → shantytowns called “Hoovervilles ”

-Breadlines & soup kitchens run by charities

-Marriage & birth rates declined

-Psychological toll — loss of dignity, hope, and trust in institutions

President Herbert Hoover’s Response

-Believed in “rugged individualism” — limited government aid

-Encouraged voluntary cooperation among businesses

-Created Reconstruction Finance Corporation (RFC) to loan to banks and railroads

-Critics said he acted too little, too late

-Bonus Army (1932): WWI veterans demanded early pay → violently dispersed

Election of 1932

-Franklin D. Roosevelt (FDR) vs. Hoover

-FDR promised a “New Deal for the American people”

-Landslide victory for FDR — people wanted hope and action

FDR’s New Deal: Goals

-Relief for the needy

-Recovery for the economy

-Reform to prevent future depressions

-“The only thing we have to fear is fear itself.” – FDR, 1933 Inaugural Address

Key New Deal Programs

-CCC (Civilian Conservation Corps): Jobs for young men building parks, roads, etc.

-WPA (Works Progress Administration): Millions employed in public works

-AAA (Agricultural Adjustment Act): Paid farmers to cut production

-FDIC (Federal Deposit Insurance Corporation): Protected bank deposits

-Social Security Act (1935): Pension for elderly, unemployment insurance

Opposition to the New Deal

-Conservatives : Said FDR went too far — too much government control, deficit spending

-Liberals/ Populists : Said he didn’t go far enough — wanted wealth redistribution

-Famous critics : Huey Long, Father Coughlin, Dr. Francis Townsend

Cultural Life in the 1930s

-Movies and radio offered escape

• “The Wizard of Oz”

• “Gone with the Wind”

• Radio comedies

-Literature reflected hardship — Steinbeck’s The Grapes of Wrath

-Federal arts programs supported artists, writers, musicians (WPA Arts Projects).

Legacy of the Great Depression

-Shifted expectations of government’s role in economy and welfare

-Created safety nets — Social Security, banking reform, labor protections

-Did not end until WWII boosted industrial production and jobs

What lessons did Americans learn from the Great Depression?

-critical lessons about financial self-reliance, government's role in economic stability, and the importance of social safety nets

-saving for emergencies, avoiding excessive debt, fostering community support, and understanding that government intervention and regulation are crucial to prevent and mitigate economic crises

How did the great depression permanently change people’s relationship with government?

-by expanding the government's role in the economy and establishing a federal responsibility for the economic stability and welfare of its citizens

-This marked a fundamental shift from the previous laissez-faire approach, where private business and market forces were expected to drive recovery

Which New Deal programs still exist today?

-several, including the Federal Deposit Insurance Corporation (FDIC), the Securities and Exchange Commission (SEC), and the Social Security Act, which established the national old-age pension system

-Other surviving programs include the Federal Housing Administration (FHA), Fannie Mae (FNMA), the Farm Credit Administration, and the Tennessee Valley Authority (TVA)