ID: Great Depression
WHEN: 1929-1939
WHO:
- Affected: The Great Depression affected virtually every American, with disproportionate impact on farmers, industrial workers, and African Americans.
- Presidents: Herbert Hoover (initial response), Franklin D. Roosevelt (New Deal)
- Economists: Influential economists of the time included John Maynard Keynes, whose theories influenced New Deal policies.
WHAT:
A severe worldwide economic downturn that began with the stock market crash on October 29, 1929 (Black Tuesday). It was characterized by widespread unemployment, bank failures, business closures, deflation, and a decline in international trade. Factors contributing to the depression included overproduction, unequal distribution of wealth, high tariffs, and a lack of regulation in the financial industry.
IMPACT: Why Significant?:
- Economic Devastation: The Great Depression led to widespread poverty and hardship. Unemployment reached 25% and many people lost their homes and farms.
- Shift in Government Role: The crisis prompted a significant expansion of the federal government’s role in the economy. The New Deal programs initiated by FDR aimed to provide relief, recovery, and reform.
- Social and Psychological Effects: The Depression profoundly impacted American society, leading to increased stress, displacement, and altered social structures. It also fostered a sense of disillusionment and distrust in institutions.
- Political Realignment: The Depression led to a major political realignment, with the Democratic Party gaining significant support from labor unions, farmers, and minorities.
- Long-Term Reforms: The Great Depression led to lasting reforms in the financial system, including the creation of the Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission (SEC).
- WWII as an Ending Factor: While New Deal programs helped alleviate some of the suffering, full economic recovery was not achieved until the onset of World War II, when increased demand for war materials stimulated production and employment.