7.9 The Great Depression

Short answer: there wasn’t one single cause—the Great Depression was the result of several linked problems that turned a 1929 stock-market collapse into a decade-long economic crisis. Longstanding weaknesses (unequal income, overproduction in factories and farms, heavy consumer credit) created a speculative bubble. The stock-market crash (Black Tuesday, Oct. 29, 1929) popped that bubble and wiped out wealth, but the slump became a depression because banks failed (many bank runs), the Federal Reserve tightened money instead of easing it (monetary contraction), and international trade fell after tariffs like Smoot-Hawley worsened global demand. Environmental disaster (the Dust Bowl) deepened farm collapse. Hoover’s limited federal relief and the RFC couldn’t stop the downturn; Franklin D. Roosevelt’s New Deal (WPA, Social Security, AAA) later expanded federal intervention to stabilize the economy. For APUSH, be ready to explain multiple causes, connect cause → effect, and use specific examples (CED keywords)—see the Topic 7.9 study guide (https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr) and practice questions (https://library.fiveable.me/practice/ap-us-history).

The crash of 1929 triggered disaster because it wasn’t just one bad day—it exposed and amplified underlying weaknesses. Stocks had been wildly overvalued by speculation and margin buying; when prices fell, investors lost huge wealth quickly. That wiped out consumer confidence and spending, so businesses cut production and laid off workers. Bank failures and runs followed as panicked depositors withdrew savings; with many banks gone, credit dried up and businesses couldn’t get loans. The Federal Reserve’s monetary contraction made the credit squeeze worse, and international shocks (like falling trade after Smoot-Hawley) deepened the slump. Together these shocks turned a financial crash into mass unemployment, farm hardship (Dust Bowl added strain), and long economic collapse—exactly the kinds of causes/effects you need to explain for AP Topic 7.9 (Learning Objective J). For a focused review, see the Topic 7.9 study guide (https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr). Practice more with AP-style questions at (https://library.fiveable.me/practice/ap-us-history).

The stock market crash (Oct. 1929, “Black Tuesday”) was a sudden collapse in share prices after a speculative bubble popped. It wiped out paper wealth and shook public confidence. The Great Depression, though, was the much longer, deeper economic crisis of the 1930s: mass unemployment, business collapse, bank failures, and severe drops in output and prices. Why they’re different: the crash was a sharp financial shock and visible symbol; the Depression was the sustained economic collapse that followed. The crash helped trigger the Depression, but other structural causes made it far worse: bank runs and failures, Federal Reserve monetary contraction, overproduction and weak consumer demand, international problems like the Smoot-Hawley tariff, and environmental disasters (Dust Bowl) that deepened rural distress (CED keywords). On the AP exam you should be able to explain both immediate triggers and broader causes/effects (Topic 7.9 LOJ). For a focused review, see the Topic 7.9 study guide (https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr) and try practice questions (https://library.fiveable.me/practice/ap-us-history).

Everyday life during the Great Depression changed radically: by 1933 unemployment hit ~25%, so many people lost steady paychecks and savings after bank failures and runs. Daily realities: long breadlines and soup kitchens, families doubling up in tiny apartments or living in shantytowns called “Hoovervilles,” and widespread evictions. Rural life was worse where the Dust Bowl ruined farms—thousands of tenant farmers and sharecroppers migrated west to California looking for work. Kids left school or worked; malnutrition and illness rose because medical care and incomes fell. Men’s and women’s roles shifted (women sometimes kept families afloat by taking domestic or factory jobs). Government responses (Reconstruction Finance Corporation, FDR’s New Deal programs like WPA and Social Security) began to reshape relief and work by providing jobs, cash benefits, and financial regulation. For AP exam answers, tie these daily effects to causes (stock market crash, bank failures, Fed contraction, Smoot-Hawley) and to New Deal policy changes (Topic 7.9; see Fiveable study guide: https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr).

For families the Great Depression meant sudden and sustained hardship: unemployment peaked around 25% by 1933, many lost savings in bank failures and couldn’t pay mortgages, and homelessness and shantytown communities called “Hoovervilles” appeared. Daily life shifted—diets shrank, children left school to work, birthrates fell, and families often split up as people migrated looking for work (Dust Bowl migrants from the Plains moved to California). Rural farmers faced low prices; the Dust Bowl made farming impossible for many, pushing migration and reliance on federal relief. Hoover’s limited response gave way to FDR’s New Deal programs (Reconstruction Finance Corporation, WPA jobs, Agricultural Adjustment Act, Social Security Act) that provided jobs, cash relief, and long-term safety nets. For AP prep, be ready to use these specifics (unemployment rates, Dust Bowl migration, New Deal policies) as evidence and to contextualize causes and effects in DBQs/LEQs (see the Topic 7.9 study guide: https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr). For extra practice, try questions at https://library.fiveable.me/practice/ap-us-history.

When thousands of banks failed after 1929, it made the Depression much worse through a vicious feedback loop. Bank runs wiped out people's savings, so households cut spending. With less consumer demand and banks unwilling or unable to lend, businesses couldn’t get credit to operate or expand—so they laid off workers. Rising unemployment further reduced demand, causing more business failures and more loan defaults. The Federal Reserve’s monetary contraction (it didn’t inject enough liquidity) deepened the credit squeeze. Hoover’s limited responses led to creation of things like the Reconstruction Finance Corporation late in the crisis, and FDR’s New Deal later aimed to stabilize banks and restore confidence (FDIC, banking reforms). For APUSH, this ties directly to causes/effects in Topic 7.9 and KC-7.1.I.C—review the Topic 7.9 study guide (https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr) and practice questions (https://library.fiveable.me/practice/ap-us-history).

The Great Depression wrecked the U.S. economy in several clear ways. After the 1929 stock-market crash and speculative bubble burst, investment and consumer spending collapsed, industrial output fell sharply, and unemployment soared to about 25%. Bank failures and runs wiped out savings and tightened credit (the Federal Reserve’s monetary contraction worsened this), which further reduced demand. International trade plunged partly because of the Smoot-Hawley tariff. Farmers suffered from price collapse and environmental disasters (the Dust Bowl), causing mass rural poverty and migration. The crisis exposed weaknesses in financial regulation and prompted major policy responses: Hoover’s Reconstruction Finance Corporation and, more decisively, FDR’s New Deal programs (WPA, AAA, Social Security Act) that created a limited welfare state and new financial safeguards. For AP exam evidence and practice, use the Topic 7.9 study guide (https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr), review Unit 7 (https://library.fiveable.me/ap-us-history/unit-7), and drill practice questions (https://library.fiveable.me/practice/ap-us-history).

The Great Depression massively expanded federal power and responsibility in everyday life. Shocked by bank failures, mass unemployment, and market collapse, policymakers under Hoover and especially FDR created new federal programs and regulators: the Reconstruction Finance Corporation, bank reforms (FDIC, SEC), the New Deal agencies (WPA, CCC), agricultural programs (AAA), and the Social Security Act (1935). That transformed the U.S. into a limited welfare state—people now expected federal relief, unemployment/old-age insurance, public-works jobs, and active economic management (monetary and fiscal policy). It also redefined modern liberalism and led to lasting expectations that the federal government would stabilize the economy and protect citizens from extreme risk. For AP review, focus on cause → policy response → long-term change (use the Topic 7.9 study guide: https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr). For practice, try problems at (https://library.fiveable.me/practice/ap-us-history).

FDR responded with a wide set of New Deal policies to stabilize finance, provide relief, and reform the economy. Key moves: a national Banking Holiday and the Emergency Banking Act plus Glass-Steagall (separating commercial and investment banking) and FDIC insurance to stop bank runs; the SEC to regulate the stock market. Relief and jobs programs included the CCC (work camps), TVA (regional development), WPA (large public-works employment), and federal support for farmers via the AAA. The NIRA/NRA tried to manage industry and wages (later struck down). Major reform: the Social Security Act (1935) creating old-age insurance and unemployment benefits; the Wagner Act strengthened labor rights. These transformed the U.S. into a limited welfare state and reshaped federal power—exactly the kinds of causes/effects AP questions ask about (CED Topic 7.9). For a focused review, see the Topic 7.9 study guide (https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr). Practice questions: (https://library.fiveable.me/practice/ap-us-history).

Start with a clear thesis that answers “how and why” the Great Depression happened and what its major effects were (economic collapse → policy transformation). Contextualize briefly—1920s credit expansion, stock speculation, agricultural strain, and weak global trade after WWI. Use at least four documents to support claims (identify Stock Market Crash/Black Tuesday, bank failures/bank runs, Federal Reserve contraction, Smoot-Hawley tariff, Dust Bowl, Hoover vs. FDR responses). For two documents, analyze POV/purpose (e.g., Hoover administration memo vs. New Deal speech). Bring one piece of outside evidence beyond the docs (Reconstruction Finance Corporation, WPA, Social Security Act, or Federal Reserve policy). Show complexity by explaining multiple causes (financial—speculation and Fed policy; structural—uneven income, agriculture; international—tariffs) and linking them to effects (mass unemployment, welfare state/New Deal reforms). Follow DBQ rules: thesis, contextualization, use ≥4 docs, cite extra evidence, source two docs, and aim for complex understanding. For a focused review, see Fiveable’s Topic 7.9 study guide (https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr) and practice questions (https://library.fiveable.me/practice/ap-us-history).

Short answer: both, but in different ways. New Deal programs (FDIC/bank reforms, Reconstruction Finance-type relief, AAA, WPA, Social Security) stabilized banking, created a limited welfare state, and reduced some poverty and hardship—shifting expectations about federal responsibility (CED KC-7.1.III; keywords: Works Progress Administration, Social Security Act, Agricultural Adjustment Act). However, the economy didn’t fully recover: unemployment peaked near 25% in 1933 and remained high through the late 1930s. World War II’s massive mobilization finally ended mass unemployment by creating wartime production and defense jobs, pushing GDP and industrial output far above pre-Depression levels. So New Deal softened and reformed the economy and provided lasting institutions, while WWII’s demand produced the full output and employment recovery. For AP exam prep, you’ll want to analyze both causation and continuity/change (use examples like WPA and wartime mobilization)—see the Topic 7.9 study guide (https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr) and more unit review (https://library.fiveable.me/ap-us-history/unit-7). Practice FRQs and multiple-choice at (https://library.fiveable.me/practice/ap-us-history).

The Great Depression’s scale—mass unemployment, bank failures, collapsing farms, and widespread poverty—shattered faith in laissez-faire and forced policymakers to act. The crisis created political pressure for federal relief, jobs programs, and economic regulation, so FDR’s New Deal built a “limited welfare state”: Social Security (1935) provided pensions/unemployment insurance; the Works Progress Administration created millions of jobs; the Agricultural Adjustment Act paid farmers to reduce production; the Reconstruction Finance Corporation and banking reforms strengthened the financial system. Those policies redefined modern American liberalism by accepting a federal role in social welfare and stabilizing the economy (CED KC-7.1.III). For AP exam evidence and phrasing, use those specific laws and programs when contextualizing or supporting a DBQ/LEQ; the Topic 7.9 study guide has concise summaries (https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr). For extra practice, check unit review (https://library.fiveable.me/ap-us-history/unit-7) and 1000+ practice problems (https://library.fiveable.me/practice/ap-us-history).

Short answer: they tried some things, but a mix of limited knowledge, ideology, and bad policy made prevention unlikely. In 1929 most policymakers didn’t fully grasp macroeconomics (no Keynesian consensus yet) and the federal government favored limited intervention and voluntarism under Hoover. Structural problems—an unregulated, fragmented banking system, heavy household and corporate debt, and speculative stock bubbles—meant shocks propagated fast. The Federal Reserve tightened money in 1929–33 (monetary contraction) and failed to stop bank runs, which deepened the downturn. Protectionist moves like the Smoot-Hawley Tariff worsened trade collapses. When Hoover did act, measures (Reconstruction Finance Corporation, limited relief) were too small and too late; larger federal responses came only under FDR’s New Deal. For AP review, focus on causes (stock market crash, bank failures, Fed policy, Smoot-Hawley, Dust Bowl) and effects (unemployment, New Deal reforms) as required by Topic 7.9 (Learning Objective J). See the topic study guide for a compact review (https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr) and try practice questions (https://library.fiveable.me/practice/ap-us-history).

The Great Depression exposed how fragile U.S. finance was: the 1929 stock market crash, widespread bank runs and thousands of bank failures, and a Federal Reserve monetary contraction destroyed savings and credit. That crisis created public demand for rules to prevent repeats. Policymakers (FDR/New Deal) responded with major regulatory reforms: the Banking Act of 1933 (Glass–Steagall) separated commercial and investment banking and created the FDIC to insure deposits and stop runs; the Securities Act of 1933 and the SEC (1934) regulated stock issuance and trading to curb speculation; and later reforms strengthened Fed supervision and created the Reconstruction Finance Corporation’s earlier model of federal intervention. On the AP exam, connect these reforms to causes (speculation, bank failures) and effects (restored confidence, expanded federal role in the economy) in DBQs/LEQs. For a concise review, see the Topic 7.9 study guide (https://library.fiveable.me/ap-us-history/unit-7/great-depression/study-guide/hI7MOeaEZFK45NrnWkxr) and practice questions (https://library.fiveable.me/practice/ap-us-history).