Great Depression

Definition

The Great Depression was a severe worldwide economic downturn that lasted from 1929 until the late 1930s, characterized by massive unemployment, significant declines in industrial production, and widespread poverty. This period profoundly impacted government-business relations, leading to new policies and reforms aimed at stabilizing the economy and preventing future 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 affected the economy.
2. Unemployment rates soared during the Great Depression, peaking at about 25% in the United States, leaving countless families struggling to survive.
3. The economic hardships led to significant changes in government policy, including increased regulation of the banking industry and the stock market.
4. The Great Depression spurred the creation of various federal agencies aimed at economic recovery, including the Works Progress Administration (WPA) and the Civilian Conservation Corps (CCC).
5. The long-lasting effects of the Great Depression reshaped public perceptions of government intervention in the economy, laying the groundwork for future social welfare policies.

Review Questions

• How did the Great Depression influence government intervention in the economy during that era?
  • The Great Depression marked a turning point in government intervention in the economy, as it highlighted the need for regulation and oversight to prevent financial disasters. In response to the economic collapse, governments implemented a range of policies aimed at stabilizing markets and supporting those affected by unemployment. This shift toward increased government involvement changed how businesses operated and interacted with regulatory authorities.
• Discuss the impact of New Deal programs on business practices during and after the Great Depression.
  • New Deal programs had a profound impact on business practices as they introduced regulations that altered how companies operated. For instance, reforms such as labor laws provided workers with rights that encouraged unionization and collective bargaining. Additionally, these programs aimed to stabilize industries through federal support, which changed the relationship between businesses and government by fostering cooperation rather than laissez-faire approaches.
• Evaluate how the legacy of the Great Depression has shaped modern public policy regarding economic crises.
  • The legacy of the Great Depression has profoundly influenced modern public policy responses to economic crises by establishing a framework for government intervention. Policies initiated during this time laid the foundation for social safety nets and regulatory measures that aim to mitigate economic downturns. The experiences from this period have led policymakers to prioritize stability through proactive measures like fiscal stimulus and financial regulation to safeguard against future depressions.

Related terms

New Deal:

A series of programs and reforms implemented by President Franklin D. Roosevelt in response to the Great Depression, focusing on relief, recovery, and reform.

Stock Market Crash of 1929: A major financial collapse that marked the beginning of the Great Depression, where stock prices plummeted, leading to widespread panic and loss of wealth.

Social Security Act: A law enacted in 1935 as part of the New Deal, establishing a social insurance program to provide financial assistance to the elderly, unemployed, and disabled.