The Great Depression

Definition

The Great Depression was a severe worldwide economic downturn that lasted from 1929 to the late 1930s, marked by a dramatic decline in industrial output, massive unemployment, and widespread poverty. This period fundamentally reshaped economic policies and social structures, prompting governments to rethink their roles in economic regulation and public welfare.

5 Must Know Facts For Your Next Test

1. The Great Depression began with the stock market crash on October 29, 1929, also known as Black Tuesday, which led to a rapid decline in consumer confidence.
2. Unemployment rates reached as high as 25% in the United States during the depths of the Great Depression, leaving millions without jobs and financial security.
3. The economic crisis was not limited to the U.S.; it had global repercussions, affecting economies around the world and leading to a decline in international trade.
4. During this time, many families faced severe hardships, leading to increased rates of homelessness, malnutrition, and social dislocation across the country.
5. The response to the Great Depression saw significant changes in government policies, including a shift towards more active government intervention in the economy through programs like Social Security.

Review Questions

• How did the Stock Market Crash of 1929 contribute to the onset of the Great Depression?
  • The Stock Market Crash of 1929 was a critical event that marked the beginning of the Great Depression. The crash led to a loss of confidence among investors and consumers, causing a rapid decline in spending and investment. This resulted in business closures and massive layoffs, which further fueled unemployment and economic instability. The interconnectedness of financial markets meant that the effects of the crash rippled through the economy, deepening the downturn.
• Evaluate how the New Deal sought to address the challenges posed by the Great Depression and its effectiveness.
  • The New Deal was a series of initiatives launched by President Franklin D. Roosevelt aimed at combating the economic devastation caused by the Great Depression. It included programs for job creation, financial reforms, and social welfare provisions intended to provide immediate relief and stimulate economic recovery. While some critics argue about its long-term effectiveness, many historians recognize that the New Deal helped stabilize banks, reduce unemployment, and restore public confidence in government intervention during economic crises.
• Analyze the long-term impact of the Great Depression on American public policy and societal attitudes toward government intervention.
  • The Great Depression had profound and lasting effects on American public policy and attitudes towards government involvement in economic matters. In response to the crisis, citizens began to expect more from their government regarding economic stability and social safety nets. This shift paved the way for increased government intervention in various aspects of life, establishing programs like Social Security and regulatory bodies to prevent future economic disasters. The legacy of these changes continues to influence contemporary debates about government roles in managing economic issues.

Related terms

Stock Market Crash of 1929: A significant collapse of stock prices that occurred in late October 1929, triggering the onset of the Great Depression.

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

Dust Bowl: A severe drought during the 1930s that devastated agricultural regions in the United States, exacerbating the economic challenges of the Great Depression.