Great Depression

Definition

The Great Depression was a severe worldwide economic downturn that lasted from 1929 until the late 1930s, marked by massive unemployment, deflation, and a dramatic decline in economic activity. This period forced a reevaluation of government roles in the economy and sparked shifts in political ideologies regarding state intervention and welfare.

5 Must Know Facts For Your Next Test

1. The Great Depression began with the Stock Market Crash of October 1929, which wiped out millions of investors and severely impacted banks and businesses.
2. Unemployment rates soared during the Great Depression, reaching approximately 25% at its peak, leaving millions without jobs or income.
3. The Great Depression led to significant changes in U.S. government policy, with increased federal intervention in the economy through programs like the New Deal.
4. Agricultural distress contributed to the Great Depression, exemplified by events like the Dust Bowl, which devastated farming regions and worsened food shortages.
5. The Great Depression had lasting effects on American society, reshaping attitudes toward government responsibility for economic welfare and leading to new social safety nets.

Review Questions

• How did the Great Depression influence changes in government ideology regarding economic intervention?
  • The Great Depression led to a significant shift in government ideology, promoting the belief that active state intervention was necessary to stabilize the economy and support citizens. The crisis highlighted the failures of laissez-faire economics and prompted leaders like Franklin D. Roosevelt to implement policies such as the New Deal, which expanded federal involvement in economic recovery and social welfare. This change set the stage for a more proactive government role in managing economic crises.
• Discuss the role of Congress during the Great Depression and how it responded to the economic crisis through legislation.
  • During the Great Depression, Congress played a pivotal role in responding to the economic crisis by passing various legislative measures aimed at recovery. Key laws such as the Emergency Banking Act and the Agricultural Adjustment Act were enacted to stabilize banks and support farmers. The collaboration between Congress and President Roosevelt was essential for enacting New Deal programs that sought to address widespread unemployment and economic instability.
• Evaluate how public opinion shifted during the Great Depression and its impact on political parties and their platforms.
  • The Great Depression significantly shifted public opinion towards favoring more robust government action to address economic hardships, impacting political parties' platforms. The struggles faced by many Americans led to growing support for Democrats under Roosevelt, who promised relief and reform through his New Deal policies. This realignment changed how parties approached issues of economic policy, with Democrats embracing a more interventionist approach while Republicans began to face challenges in maintaining their traditional ideologies against rising expectations for government involvement in ensuring economic security.

Related terms

New Deal:

A series of programs and policies implemented by President Franklin D. Roosevelt to promote economic recovery and social reform during the Great Depression.

Stock Market Crash of 1929: A major financial collapse that occurred in October 1929, triggering the onset of the Great Depression by drastically reducing wealth and confidence in the economy.

Social Security Act:

A 1935 law that established a system of old-age benefits, unemployment insurance, and aid to families with dependent children, reflecting the government's expanded role in economic security.