causes of the great depression essay grade 11

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Course: US history   >   Unit 7

• The presidency of Herbert Hoover

The Great Depression

• FDR and the Great Depression
• The New Deal

• The Great Depression was the worst economic downturn in US history. It began in 1929 and did not abate until the end of the 1930s.
• The stock market crash of October 1929 signaled the beginning of the Great Depression. By 1933, unemployment was at 25 percent and more than 5,000 banks had gone out of business.
• Although President Herbert Hoover attempted to spark growth in the economy through measures like the Reconstruction Finance Corporation, these measures did little to solve the crisis.
• Franklin Roosevelt was elected president in November 1932. Inaugurated as president in March 1933, Roosevelt’s New Deal offered a new approach to the Great Depression.

The stock market crash of 1929

Hoover's response to the crisis, what do you think.

• David M. Kennedy, Freedom from Fear: The American People in Depression and War, 1929-1945 (New York: Oxford University Press, 1999), 37-41, 49-50.
• T.H. Watkins, The Hungry Years: A Narrative History of the Great Depression in America (New York: Henry Holt, 1999), 44-45; Kennedy, Freedom from Fear , 87.
• Louise Armstrong, We Too Are the People (Boston: Little, Brown & Co., 1938), 10.
• On bank failures, see Kennedy, Freedom from Fear , 65.
• See Kennedy, Freedom from Fear , 87, 208; Robert S. McElvaine, ed., Down and Out in the Great Depression: Letters from the “Forgotten Man” (Chapel Hill: University of North Carolina Press, 1983), 81-94.
• John A. Garraty, The Great Depression: An Inquiry into the Causes, Course, and Consequences of the Worldwide Depression of the Nineteen-Thirties, as Seen by Contemporaries and in the Light of History (New York: Doubleday, 1987).
• Kennedy, Freedom from Fear , 83-85.
• On Hoovervilles and Hoover flags, Kennedy, Freedom from Fear , 91.

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Cause and Effects of The Great Depression

Introduction.

The great Depression took place in America during the 1920s and its effects were unprecedented as it caused poverty and suffering upon the society.

Many believe that that the depression was caused by the U.S. stock-market crash that took place in 1929. Nonetheless, there is no consensus on its cause as other factors are also acceptable. The economic devastation of the 1920s led to the Great Depression and brought a tragedy for the whole society.

Causes of The Depression

Many causes have been put forward to explain the causes of the great Depression over which the economists have disagreed. However, one thing that cannot be disputed is that the Depression had major impacts upon the country and the lives of people.

Crash of stock market

The crash of the stock market in 1929 ushered in the Great Depression. The capital in America was represented by stocks. There were easy-money policies that caused the stocks prices to go very high and this led to a big speculation that made people invest all their money in the stock market.

Eventually, the price of the stocks went down sharply and people started selling their stocks in panic. The number of stocks available for sale was higher that the number of people willing to buy and eventually the market crashed (Great Depression, 2008).

Uneven distribution of prosperity

The 1920s saw the American economy rise but the prosperity was unevenly distributed and the farmers as well as the untrained laborers were largely excluded. It therefore led to the nation having a greater production capacity and could not match in consuming the products.

Moreover, the policies of the Republican administration in regards to war-debts and tariff had led to a decline in market for the American goods (Great Depression, 2008).

Effects of The Depression

The effects of the Great Depression were felt both at home and abroad. No one escaped its reeling effects. For example, countries in Europe were affected greatly as their economies were hit hard. In Germany, the economic blow led to social dislocation that is alleged to have played a major role bringing Adolf Hitler to power (Great Depression, 2008).

Unemployment

When the Great Depression set in many people lost their jobs. The unemployment levels rose as many factories closed and up to about 16 million people had lost their jobs between 1932 and 1933 (Great Depression, 2008). The Great Depression compares to the economic recession that took place in 2007 in American and its effects felt on a global scale.

For instance, the following words by president Obama show the similarities “Even though economists may say the recession officially ended last year, obviously for the millions of people who are still out of work… it’s still very real for them” (Hill, 2010).

Massive poverty

Consequently, job losses and loss of money in the stock market the people fell into massive levels of poverty. The people did not have a source of income and suffered a great deal. The country’s economy suffered too” The gross national product declined from the 1929 figure of $103,828,000,000 to $55,760,000,000 in 1933” (Great Depression, 2008, par. 2).

The suffering led economic hardships as well as physical, emotional, emotional and cognitive sufferings to the people because the Depression was a big tragedy hence they exhibited signs that people going through other crises exhibit (Barr, 2005).

The Great Depression led to untold suffering to millions of Americans as well as the devastation of the country’s economy. The effects extended to other countries as well due to international trade just as it happened during the recent economic down turn. No country is in isolation and its activities affect other countries too even if they do not have a hand in causing the problems.

It therefore follows that countries must take precautions to prevent an event like the Great Depression by learning its causes as well as its effects in order to minimize future damage or suffering in case of a similar tragedy.

Reference List

Barr, J.G. (2005). Predicting and Managing Crisis Behavior.

Great Depression. (2008). Retrieved from EBSCOhost database.

Hill, P. (2010). Recession over a year, but recovery not felt . The Washington Times . P1, 1. Web.

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IvyPanda. (2018, May 23). Cause and Effects of The Great Depression. https://ivypanda.com/essays/cause-and-effects-of-the-great-depression/

"Cause and Effects of The Great Depression." IvyPanda , 23 May 2018, ivypanda.com/essays/cause-and-effects-of-the-great-depression/.

IvyPanda . (2018) 'Cause and Effects of The Great Depression'. 23 May.

IvyPanda . 2018. "Cause and Effects of The Great Depression." May 23, 2018. https://ivypanda.com/essays/cause-and-effects-of-the-great-depression/.

1. IvyPanda . "Cause and Effects of The Great Depression." May 23, 2018. https://ivypanda.com/essays/cause-and-effects-of-the-great-depression/.

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History Grade 11 - Topic 2 Contextual Overview

Introduction

Like communism in Russia, American capitalism was an ideological and policy framework that was varied in both approach and application. Capitalism first started taking root as an economic system during the industrial revolution beginning in England at the end of the 18th century. Industrial techniques and machinery spread from the textile mills in Lancashire to the European continent and across the Atlantic to independent America. In the last decades of the 18th century textiles mills were set up in New England, which in turn produced the first large-scale industrial techniques on the continent.

Throughout the 19th century along the north east coast of the United States, as it was expanding territorially to the west, more and more industries were set up along with new industrial techniques (one of the most famous being the Waltham-Lowell system). [1] The new industrial capitalists became incredibly powerful figures within American society, and from the 1880s to the 1920s developed a political system that relied on the close interaction between big corporations and the state. Reminiscent of the Military-Industrial Complex (coined in 1961 in by President Dwight Eisenhower), Meyer Weinberg suggests that during the half century or so precluding the ‘Roaring Twenties’, industrialists and bankers consolidated monopolies in selected – usually heavy – industries that relied on a political patronage network to function efficiently. [2] The onset of WWI further developed this relationship, where Allied purchase of American military supplies, along with the sale of Allied bonds in America, spurred on heavy industries.

In 1917, as the USA entered the war, Weinberg notes how “Major industrial interests profited greatly. Sitting at the lever of the political economy of war, industrialists learned the potentials of capitalism when it was integrated into the governmental system.” [3] It was this early, powerful relationship that set the groundwork for industrial capitalism in the first half of the 20th century.

This article brings into view the development of capitalism in the United States of America. We pay detailed attention to the crisis of capitalism that happened as a consequence of the Great Depression. From its inception, Roosevelt’s New Deal met strong criticism as it was assumed to install a “socialist” discourse and practice. To this end, we pose a question to ask whether Roosevelt’s form of state intervention to create job opportunities, as well as the social welfare system he set could be considered socialist in its orientation, and thereby undermined the capitalist system in the USA? There are no clear-cut answers to these questions, and this forces to ask a series of questions that considers the nature and significance of capitalism in the USA.

The Nature of Capitalism in the USA

It is an age-old adage that history is written by the victors. That Western capitalist countries such as USA, Britain and France  ‘defeated’ communism of the  East which was represented by the USSR Eastern Bloc with the collapse of the Berlin Wall and the dissolution of the Soviet Union is one such example – in this we hear echoes of the ideological battle that raged during the cold war between the communist east and capitalist west [4] . This ideological positioning, however, stretches further back than the post-WWII era; since the early 20th century, the American political culture has defined itself as capitalist. Whilst, as we have seen, WWI brought government control of important sectors of the American economy, the post-WWI political culture wished for a return of the industrial powerhouse to an unregulated economy.

As President Warren Harding, elected in 1920, said soon after his election, “I have said to the people we meant to have less of government in business as well as more business in government.” [5] The post-WWI era represented a wish to return to ‘normalcy’ in American economic and political life. The result was a retreat into isolationism after the founding of the League of Nations at the Paris Peace Conference in 1920. Harding’s death in 1923 brought to power his vice-president, Calvin Coolidge, who would share similar sentiments to his predecessor, proclaiming that “the chief business of the American people is business.” [6] Like Harding, Coolidge was opposed to entering the League of Nations, and a number of isolationist policies came into effect during his tenure, such as the 1924 Immigration Act. During this period, then, capitalism in the USA resembled classical liberal economics – relying on a small government where the market would regulate itself, and where social wellbeing would increase accordingly.

The American Dream

The Immigration Act of 1924, which capped the number of immigrants into the USA to 165 000 a year (and further restricted immigration from non-Western European countries), represented a reversal on the promises of the ‘American Dream’. The notion of the American Dream during the beginning of the 20th century meant, as Sarah Churchwell explains, “the opposite of what it does today.” [7] The original American Dream was “not a dream of individual wealth; it was a dream of equality, justice and democracy for the nation.” [8] During the Cold War, this egalitarian democracy was then repurposed to become “an argument for a consumer capitalist version of democracy.” This, Churchwell notes, is where it has been frozen. [9] The American Dream of democratic equality – of racial and economic opportunities – drove the migrants during the early 20th century to the sprawling American empire. It was supported by the histories of the first migrants in the 1600s, who escaped religious persecution in Europe.

More modern myths surrounding the American Dream were driven by stories of individual success amongst migrants such as Andrew Carnegie, spurning an entire literature of ‘rags-to-riches’ stories etched into popular memory by writers such as Horacio Alger. [10] These stories emphasised that entrepreneurship and hard work could lift one out of poverty into a comfortable, middle-class existence. Thus, the American Dream was a more just, and equal society that everyone could obtain. During the 1920s, this was articulated as a function of democratic capitalism – that wealth would bring more freedom and justice to everyone. However, in practice, there were stark racial inequalities, religious intolerance and class divisions.

The 1920s Boom

The pro-business policies of the Republican presidents in the 1920s (which included removing labour laws and reducing business taxes and tariffs) provided a boom for manufacturing and consumerism in the United States. During the 1920s low taxes for the rich allowed for the investment, and subsequent boom, in manufacturing, helped by the increasingly easy credit extended to businesses and entrepreneurs. Easy credit was not only extended to businesses, but also consumers, in the form of higher purchase arrangements. By the end of the 1920s, vacuum cleaners, refrigerators and washing machines became “everyday household items” to an increasingly urbanised American consumer class. [11] However, these gains made by the consumer class were unstable – by the end of the 1920s, the high tariffs imposed on foreign imports – a part of its isolationist policies and desire to protect American industries - meant that every day Americans were paying high prices for their new goods. Furthermore, in response to these tariffs, European states also begun placing tariffs on American goods. Thus, with the shrinking buying power of American consumers, and limited opportunity to export American industrial goods, American industries began to suffer. [12]

The previous gains made by the American labour movement also suffered. The pro-business policies of the decade were a reaction to the progressive labour policies that characterised the early 20th century. Labour strikes and unions were dealt with more harshly, and wages were kept low. Wages did not increase along with productivity (add stat here), which in the long run meant that workers were unable to buy the goods they were producing. [13] The low tax rate for the rich, and the lowering of corporate taxes, meant that the wealthy, without enough investment opportunities in industries) would use their money for prospecting, the effects of which caused the Wall Street (which we shall come to soon).

USA Society in the 1920s

The 1920s, also known as the ‘Roaring Twenties,’ was a socially significant era in American, and Western, history. The increased urbanisation of the American population, coupled with the expansion of consumer goods, brought large parts of the country into contact with a range of new goods and ideas for the first time. The 1920s began with the 19th Amendment of the United States, which extended the voting franchise to all females (although it would take over 40 years for that to be extended to black females in the South).  During the First World War, as men were sent overseas to fight, women began to increasingly work in blue and white-collar jobs. With their new political and economic freedoms, they began to increasingly exhibit social freedoms. Symbolic of this freedom were the emergence of ‘flappers’ – women who “smoked in public, drank alcohol, danced at jazz clubs and practiced a sexual freedom” that “shocked the Victorian morality of their parents.” [14] This generation was chronicled by writers such as F. Scott Fitzgerald, whose novel The Side of Paradise was instrumental in describing – and in some ways spurring on – the ‘Jazz Age’, a term that Fitzgerald popularised. 

Jazz was actually an important social contribution to the 1920s. The rapid migration to the cities – and the meshing of cultures (think of black Southern rural folk mixing with immigrants from Europe) that emerged with it – created new cultural hybrids, of which the free movement that jazz took was and is symbolic of. The new upbeat music in the city was also sent out across the country via radio, which had become an increasingly common commodity in households across the USA (the first commercial radio station - Pittsburgh’s KDKA - began in 1920; three years later there were more than 500 stations in the USA. By the end of the 1920s, more than 12 million households had radios). [15] However, whilst there were many aspects of the 1920s that spoke to a freeing of society, this decade also brought some of the worst racial violence of the century (think of the Tulsa Race Riots of 1921).  The Roaring Twenties saw a return of the Klu Klux Klan, which had two million members by the middle of the 1920s. [16] The Klan symbolised the friction that developed in the post-WWI era: between the urban and rural areas, between Catholics and Protestants, and between whites and blacks. This friction would continue to  dominate cultural discourse in the 20th, and 21st centuries

The Wall Street Crash of 1929

On October 28th 1929, also known as Black Monday, the Wall Street Crash began. Over the next few days, stock prices crashed to a point that would take ‘another 20 years’ before ‘the Dow regained enough momentum to surpass the 200-point level.’ Everyone was affected, from stockbrokers to farmers to blue-collar workers; many people, with the new wealth that the 1920s brought, invested in stocks. They lost most of their wealth. The reasons for the Wall Street Crash have been a point of debate for almost a century. Initially, it was thought to be simply the result of speculation: that a panic arose amongst shareholders and as they sold, share prices crashed and investors subsequently lost their wealth. [17] Thus, the immediate concerns were towards the banking industry: savings that the public kept at banks was invested by these institutions in the stock market, which meant they were all lost when the stocks crashed. In this situation, both the banks and the public lost money. Furthermore, the public could not repay the easy loans they were given by the banks, at which point they repossessed homes. With the economic decline, most people having lost large amounts of wealth, the banks could not sell repossessed homes, and so they lost money. [18]

However, these were only symptoms of deeper problems within the American economy and society at large. One was the imbalance of wealth that came to increasingly describe the nation. During the 1920s, the gap between the wealthy and the rest continued to widen and was the result of the various ‘pro-business’ policies already outlined above. In particular, the low taxes placed on the wealthy led them to speculation, whilst a lack of government intervention in large industries led to monopolies and high prices for consumers. Furthermore, the harsh attitude towards organised labour meant that wages were kept low, which further exacerbated the wealth gap. But inequality was also felt across geographic localities: overall, urban centres were better off than rural centres, and the North more prosperous than the South. Here again government policies were partly to blame – the various administrations of the 1920s failed to support agriculture in any serious way. [19]

What followed after the crash was the Great Depression. The American government was unprepared for an economic recession, and the lack of state intervention in the following years only made the situation worse. In 1930 there were four million unemployed Americans; by 1931 this was 6 million. In 1933, the worst year of the Great Depression, 24.9% of the American public was unemployed, and that rate continued to hover above 14% until 1940. [20] Between 1923 and 1930, 5,000 banks collapsed. This had major political consequences. In a complete reversal of the policies of the previous decade, Franklin Roosevelt won the 1932 election, defeating the incumbent Republican President Hoover. [21]

The Election of Roosevelt

Democrat Franklin D. Roosevelt came into power on the back of promises of a ‘new deal’ that would address the problems brought about by the Great Depression. He has worked with a small group of advisors, called the Brain Trust, to achieve this end. The New Deal focussed on relief for the needy, recovery of the economy and reform of the economic system, specifically focusing on banks and the stock market. [22] The New Deal overtly rejected socialism but promoted government intervention to restore prosperity and reduce inequality. Roosevelt adopted 15 pieces of New Deal legislation in the first 100 days of office. [23] .

Analysis of the New Deal

The first New Deal occurred from 1993 to 1935. In an effort to provide relief for the most needy, soup kitchens were established along with temporary housing. Funding was given by the Federal Emergency Relief Administration. In an effort to spur on economic recovery, several recovery programmes were implemented, amongst them the Civil Works Administration (CWA) - a job creation program. In addition, the Civilian Conservation Corps (CCC) provided thousands of men with jobs at national parks, public lands and other conservation projects. Within the recovery programmes there was the Agricultural Adjustment Act (AAA) which subsidized farmers to reduce their production and destroy their crops and livestock, so that supply could be reduced to increase the lowering demand in an effort to have better prices. In the reforming the economic system, Roosevelt implemented an emergency Banking Relief Act which stipulated that only banks deemed to be financially sound would be permitted to reopen their doors. To increase confidence, the government secured guaranteed deposits of investors in an effort to curb hoarding. [24]

The New Deal brought criticism from different parts of society, especially the wealthy and conservatives who were opposed to high taxes and the nascent social security network just being set up. [25] Furthermore, Republicans feared that the government was spending more money than it could afford, which would result in even higher taxes and a bloated bureaucracy. On the other hand, some left-wing groups criticised the New Deal for not being radical, arguing for the redistribution of wealth and the setting of a national minimum wage [26] . In addition, communists in America perceived Roosevelt as an autocratic leader. Within the Democratic Party there was also opposition, particularly from  representatives of Southern States who refused to see African Americans as political and social equals.

Assessment of the New Deal

For some, the advent of the New Deal threatened the cherished free market. However, one could argue that it prevented a potential revolution, driven by the unemployed and hungry. President Roosevelt restored confidence in liberal democracy. The New Deal removed the dangers of an unregulated economy without abandoning capitalism in America. [27] While the New Deal did not end the Great Depression, it brought back dignity to the American people.  However, the massive intervention of the state in the economy contradicted the belief of many capitalists. The corporatist state that the New Deal created (and which, to be accurate, was the state of capitalism during the late 19th and early 20th century) a new relationship between labour and business. [28] Labour provided a stable workforce whereas the government made sure to regulate markets when they became unstable. Conservative capitalists viewed this as socialism.

Outbreak of the World War II and the economic recovery of the USA

In 1937 there was a recession, which came to be known as the Roosevelt Recession. It was caused by cut backs on the New Deal reforms. During the mid-1930s, Hitler was on an aggressive path which eventually caused World War II. During this time, Roosevelt saw that the USSR was hoping to open up trade. In recognition of this, the USA employed three Acts so they would remain neutral. The first Act was stopping any shipment of US weapons to any countries who were involved in the war. The second Act was US loans to any countries who were involved in the war. [29] Lastly, the USA forbid any US citizen to travel on ships which belonged to any country which was at war. However, the US allowed food sales to countries at war on a ‘cash and carry’ basis. Due to improved economic conditions caused by an increase in industrial production, the USA was prepared for possible involvement in WW2. The US did this by providing their allies with war materials. In addition, the USA started drafting men into the army. In 1941, the USA officially entered WW2 where they fought Japan and Germany. This was a time where there was more prosperity in the US as government increased their spending.  The economic recovery of the USA was aided by the demand of weapons and in turn of raw materials to revitalise industry in the States. [30] By being involved in the war, the United States government invested significant capital into industries and men for the War. This was the beginning of the military-industrial complex which describes the close relationship between a nations military and its defines industry which supply it which together have a vested interest in influencing public policy. [31]

Impacts of and responses to the crises of capitalism in the USA in other parts of the world, such as Germany and Japan

The Great Depression spread throughout the world. When the USA recalled their loans, bank failures occurred across Europe. [32] Japan and Germany responded to this with militarist governments. Germany suffered more than any other nation as a result of the recall of US loans, which caused its economy to collapse. Unemployment rocketed, poverty soared and Germans became desperate. [33] Hitler quickly set about dismantling German democracy. The American and British governments developed welfare systems to aid their public. The 1929 New York Stock Exchange crash and the failure of important European banks plunged the entire world into an economic depression. Japan was hit especially hard. With practically no natural resources, the nation had to import oil, iron, steel, and other commodities to keep its industry and military forces alive. [34] The USSR survived and escaped the depression because of the Stalinist ‘Socialism in One Country,’ which favoured independent industrialisation, not reliant on the industries of other nations. Countries that exported raw products to the USA – such as Latin American countries, which exported farm produce - were affected the most.

Conclusion: The cyclical nature of capitalism

Capitalism typically displays a boom and bust cycle. Booms are defined as periods of economic growth categorized by increased spending through credit. Increased spending also encourages economic growth though raising stock market indexes [35] . However, in turn, increased price indexes lead to reduced investment and consumption spending due to high prices. Reduced investment spending and consumption are components of the bust part of the economic cycle as economic activity declines. The cycle reinforces itself as the government intervenes with fiscal policies that are meant to promote economic growth again. [36] In the context of the US, the 1920 economic boom followed directly by the Wall Street Crash of 1929 shows an example of this boom-bust cycle.

This content was originally produced for the SAHO classroom by Sebastian Moronell, Ayabulela Ntwakumba, Simone van der Colff & Thandile Xesi

[1] Allan MacDonald. "Lowell: A Commercial Utopia." The New England Quarterly 10, no. 1 (1937): 37-62.

[2] Meyer Weinberg. A Short History of American Capitalism. Amherst, MA: New History Press, 2003.

[4] Ost, David. The defeat of solidarity. Cornell University Press, 2018.

[5] Encyclopaedia Britannica. Warren G. Harding | Facts, Accomplishments, & Biography. [online] Available at: < https://www.britannica.com/biography/Warren-G-Harding&gt ; [Accessed 30 March 2021].

[6] Encyclopaedia Britannica. Calvin Coolidge | Biography, Facts, & Quotes. [online] Available at: < https://www.britannica.com/biography/Calvin-Coolidge&gt ; [Accessed 30 March 2021].

[7] Diamond, A. The Original Meanings of the “American Dream” and “America First” Were Starkly Different from How We Use Them Today. [online] Smithsonian Magazine. Available at: < https://www.smithsonianmag.com/history/behold-america-american-dream-sl… ; [Accessed 30 March 2021].

[10] Wills, Matthew, 2020. The Creepy Backstory to Horatio Alger's Bootstrap Capitalism | JSTOR Daily. [online] JSTOR Daily. Available at: < https://daily.jstor.org/the-creepy-backstory-to-horatio-algers-bootstra… ; [Accessed 31 March 2021].

[11] The Balance. n.d. The Economy in the 1920s and What Caused the Great Depression. [online] Available at: < https://www.thebalance.com/roaring-twenties-4060511&gt ; [Accessed 31 March 2021].

[12] Pettinger, T., n.d. What caused the Wall Street Crash of 1929? - Economics Help. [online] Economics Help. Available at: < https://www.economicshelp.org/blog/76/economics/wall-street-crash-1929/… ; [Accessed 6 April 2021].

[14] HISTORY. n.d. Flappers. [online] Available at: < https://www.history.com/topics/roaring-twenties/flappers&gt ; [Accessed 31 March 2021].

[15] HISTORY. n.d. The Roaring Twenties. [online] Available at: < https://www.history.com/topics/roaring-twenties/roaring-twenties-histor… ; [Accessed 1 April 2021].

[17]   Pettinger, T., n.d. What caused the Wall Street Crash of 1929? - Economics Help. [online] Economics Help. Available at: < https://www.economicshelp.org/blog/76/economics/wall-street-crash-1929/… ; [Accessed 6 April 2021].

[19] The Balance. n.d. The Economy in the 1920s and What Caused the Great Depression. [online] Available at: < https://www.thebalance.com/roaring-twenties-4060511&gt ; [Accessed 31 March 2021].

[20] The Balance. 2021. Compare Today's Unemployment with the Past. [online] Available at: < https://www.thebalance.com/unemployment-rate-by-year-3305506#:~:text=Th… ; [Accessed 1 April 2021].

[21] Douglas F. Dowd, "A Comparative Analysis of Economic Development in the American West and South," Journal of Economic History, 16 (December 1956), p. 569

[22] Schlesiinger, Arthur M. The Coming of the New Deal: The Age of Roosevelt, 1933-1935. Vol. 2. Houghton Mifflin Harcourt, 2003.

[23] Wallis, John Joseph, Price V. Fishback, and Shawn Kantor. “11. Politics, Relief, and Reform: Roosevelt’s Efforts to Control Corruption and Political Manipulation during the New Deal.” In Corruption and Reform, pp. 343-372. University of Chicago Press, 2007.

[24] Terms 1 and 2 Grade 11 Topic 2 “Capitalism in the US 1900 to 1940” – Study Notes. This can be found at  www.e-classroom.co.za . (Accessed 30 March 2021). 

[25] Zelizer, Julian E. “The Forgotten Legacy of the New Deal: Fiscal Conservatism and the Roosevelt Administration, 11933-1938” Presidential Studies Quartely 30, no. 2 (2000): 332-359.

[26] Bellus, Jewel. “Old and New Left Reappraisals of the New Deal  and Roosevelts Presidency.” Presidential Studies Quarterly 9, no. 3 (1979): 243-266.

[27]   Olson, James Stuart. Saving Capitalism, The Reconstruction Finance Corporation and the New Deal, 1933-1940. Princeton University Press, 2017.

[28] Stors, Landon RY. Civilizing Capitalism: The National Consumers’ League, Women’s Activism, and Labor Standards in the New Deal Era. University of North Carolina Press, 2003.

[29] Heinrichs, Waldo H. Threshold of War: Franklin D. Roosevelt and American Entry into World War II. Oxford University Press on Demand, 1988.

[30] Tassava, Christopher. “The American Economy during World War II”. EH.Net Encyclopedia

[32]   Moessner, Richhild, and William A. Allen. Banking crises and the international monetary system in the Great Depression and now.”  (2010)

[33] http://teacher.scholastic.com/pearl/timeline/time4.htm#:~:text=The%2019… .

• Diamond, A. The Original Meanings of the “American Dream” and “America First” Were Starkly Different from How We Use Them Today. [online] Smithsonian Magazine. Available at: < https://www.smithsonianmag.com/history/behold-america-american-dream-slogan-book-sarah-churchwell-180970311/ > [Accessed 30 March 2021].
• Encyclopaedia Britannica. Warren G. Harding | Facts, Accomplishments, & Biography. [online] Available at: <https://www.britannica.com/biography/Warren-G-Harding> [Accessed 30 March 2021].
• Encyclopaedia Britannica. Calvin Coolidge | Biography, Facts, & Quotes. [online] Available at: <https://www.britannica.com/biography/Calvin-Coolidge> [Accessed 30 March 2021].
• Gertner, N. and Heriot, G., n.d. Interpretation: The Nineteenth Amendment | The National Constitution Center. [online] constitutioncenter.org. Available at: <https://constitutioncenter.org/interactive-constitution/interpretation/amendment-xix/interps/145> [Accessed 31 March 2021].
• HISTORY. n.d. The Roaring Twenties. [online] Available at: <https://www.history.com/topics/roaring-twenties/roaring-twenties-history> [Accessed 1 April 2021].
• HISTORY. n.d. Flappers. [online] Available at: <https://www.history.com/topics/roaring-twenties/flappers> [Accessed 31 March 2021].
• http://teacher.scholastic.com/pearl/timeline/time4.htm#:~:text=The%201929%20New%20York%20Stock,industry%20and%20military%20forces%20alive.
• MacDonald, Allan. "Lowell: A Commercial Utopia." The New England Quarterly 10, no. 1 (1937): 37-62.
• Ost, David. The defeat of solidarity. Cornell University Press, 2018.
• Pettinger, T., n.d. What caused the Wall Street Crash of 1929? - Economics Help. [online] Economics Help. Available at: <https://www.economicshelp.org/blog/76/economics/wall-street-crash-1929/> [Accessed 6 April 2021].
• Tassava, Christopher. “The American Economy during World War II”. EH.Net Encyclopedia, edited by Robert Whaples. February 10, 2008. URL http://eh.net/encyclopedia/the-american-economy-during-world-war-ii/ [Accessed on 30 March 2021]
• Terms 1 and 2 Grade 11 Topic 2 “Capitalism in the US 1900 to 1940” – Study Notes. This can be found at  www.e-classroom.co.za . (Accessed 30 March 2021). 
• The Balance. n.d. The Economy in the 1920s and What Caused the Great Depression. [online] Available at: <https://www.thebalance.com/roaring-twenties-4060511> [Accessed 31 March 2021].
• The Balance. 2021. Compare Today's Unemployment with the Past. [online] Available at: <https://www.thebalance.com/unemployment-rate-by-year-3305506#:~:text=The%20highest%20rate%20of%20U.S.,1982%20when%20it%20reached%2010.1%25.&text=The%20lowest%20unemployment%20rate%20was%201.2%25%20in%201944.> [Accessed 1 April 2021].
• Tulsa Historical Society & Museum. n.d. 1921 Tulsa Race Massacre - Tulsa Historical Society & Museum. [online] Available at: <https://www.tulsahistory.org/exhibit/1921-tulsa-race-massacre/> [Accessed 1 April 2021].
• Weinberg, Meyer. A Short History of American Capitalism. Amherst, MA: New History Press, 2003.
• Wills, Matthew, 2020. The Creepy Backstory to Horatio Alger's Bootstrap Capitalism | JSTOR Daily. [online] JSTOR Daily. Available at: <https://daily.jstor.org/the-creepy-backstory-to-horatio-algers-bootstrap-capitalism/> [Accessed 31 March 2021].

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5 Causes of the Great Depression

By: Patrick J. Kiger

Updated: April 17, 2023 | Original: March 10, 2022

The Great Depression , a worldwide economic collapse that began in 1929 and lasted roughly a decade, was a disaster that touched the lives of millions of Americans—from investors who saw their fortunes vanish overnight, to factory workers and clerks who found themselves unemployed and desperate for a way to feed their families.

Some people were reduced to selling apples on street corners to support themselves, while others lost their homes and were forced to survive in shanty towns that became known as “ Hoovervilles ,” a bitterly derisive reference to President Herbert Hoover, who in the early 1930s often claimed that “ prosperity was just around the corner ,” even as economic and trade policy mistakes and reluctance to provide government assistance to ordinary Americans worsened their predicament.

It’s not easy—even for people who’ve lived through the economic downturn caused by the COVID-19 pandemic—to grasp the depths of deprivation to which the economy sank during the Great Depression. When the unemployment rate peaked in 1933, 25.6 percent of American workers—one in four—found themselves unemployed. That’s a vastly higher rate than the 14.7 percent unemployment in April 2020, when the coronavirus forced businesses and factories to shut down.

Things were so bad that of all the days of unemployment experienced by individual American workers in American history, half occurred during the Great Depression, according to University of California, Irvine economics Professor Gary Richardson , who has done extensive research on that period and the subject of downturns in general.

“There have been a lot of ups and downs, but the Great Depression is really the biggest one,” he explains.

It’s not easy to explain exactly why such hard times happened. “For something to be as bad as the Great Depression, you really need multiple things going wrong, in the U.S. and around the world,” Richardson says.

Here are some of the things that historians and economists often point to as factors that combined to lead to the worst economic disaster in history.

1. Vulnerabilities in the Global Economy

In the 1920s, nations bounced back from the disruption and destruction caused by World War I , with factories and farms producing again, Richardson notes. But the nature of the economy in the United States and elsewhere shifted, as ordinary consumers buying durable goods such as appliances and cars—often on credit—became more and more important.

While that consumption created a lot of wealth for business owners, it also made them vulnerable to sudden shifts in consumer confidence. At the same time, nations that were producing a lot of products and exporting them became fierce competitors. “The war had eliminated a lot of the cooperation between nations that were required to run the international financial system,” Richardson says. That inability to work together at controlling problems meant that any one country’s efforts to control a downturn were less effective.

2. Financial Speculation

The 1920s economic boom helped breed a widespread belief that it was easy to get rich quick if you were bold enough to invest in the right opportunity at the right time. That’s one reason why so many ordinary Americans were fleeced by con artists who sold them on shady schemes , from Florida swampland and nonexistent oil deposits to the notion of buying Spanish mail coupons and redeeming them for U.S. stamps to profit on the weaker Spanish currency.

But the riskiest gambling took place on Wall Street. Investors increasingly bought stocks on margin, in which they put down as little as 10 percent of the price of a stock, and borrowed the rest of the money, with their stock itself as collateral. Corporate stocks soared, and brokers made huge commissions. 

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But the bubble eventually had to burst. It did that on Black Monday, October 28, 1929 , when the Dow Jones average declined nearly 13 percent in one day. That started a period of catastrophic declines that destroyed almost half of the Dow’s value in a single month. By 1932, at the nadir of the financial crisis, the nation’s public companies had lost 89 percent of their value. Scores of investors were ruined, and companies found it difficult to finance their operations.

“The stock market crash did two things,” explains Mary Eschelbach Hansen , a professor of economics at American University. “It had a wealth effect on consumption (when people’s wealth falls, they consume less), and it also made consumers and firms pessimistic. Then came a series of banking panics and failures. Households lost more of their wealth, and the lines of credit that firms used were disrupted. Unemployment soared.”

3. Blunders by the Fed

The Federal Reserve System, created in 1913, was supposed to ensure the nation’s economic stability by controlling the money supply. But the still-new institution’s policies in the 1920s not only failed to stop the Great Depression but actually may have helped to cause it.

“There was a drastic 67 percent increase in the money supply between 1921 and 1929,” explains Daniel J. Smith , a professor of economics and finance and director of the Political Economy Research Institute at Middle Tennessee State University.

That policy led to declining interest rates, which encouraged people to borrow and overinvest. “It also led to unchecked speculation in the formation of a bubble in the stock market,” Smith says. “Normally, overinvestment would lead to rising interest rates, which would act as a natural break to prevent a bubble from forming. This didn’t occur due to the easy monetary policies of the young Fed.”

But eventually, in 1929, the Fed’s board worried that speculation was out of control , and abruptly slammed on the breaks by contracting the money supply and raising interest rates, Smith notes.

The Fed’s move to cool the stock market worked a little too well. “They got the stock market to come down,” Richardson explains. “But then it came down a lot, and it came down very quickly.”

4. The Gold Standard

Back in 1929, the United States—like many other countries at the time—was on the Gold Standard, with the dollar redeemable in gold and pegged to its value. But after the Wall Street crash, nervous investors began to trade their dollars for gold. 

As former Fed chairman Ben Bernacke noted in a 2004 lecture , the Fed then moved to jack up interest rates higher to protect the dollar’s value. But those high-interest rates made it difficult for businesses to borrow the money that they needed to survive, and many ended up closing their doors instead.

5. The Smoot-Hawley Act

Trade protectionists in Congress enacted the Smoot-Hawley Act , which was written in early 1929, while the economy still seemed to be going strong. But after the Wall Street Crash weakened the economy, President Hoover still signed it into law in 1930. The law raised U.S. tariffs by an average of 16 percent, in an effort to shield American factories from the competition with foreign countries’ lower-priced goods. But the move backfired when other countries put tariffs on U.S. exports.

“If you're a country and you impose tariffs that can be good for your domestic industries because your domestic energy might produce more for home consumption,” Richardson says. “But if other countries retaliate, then it could be bad for everybody.”

Combined: A Perfect Economic Storm 

The really unlucky thing was that all those factors combined in a sort of perfect economic storm, whose devastating effects had long-lasting repercussions. As Richardson notes, the U.S. economy didn’t again reach full employment until 1940—just in time for World War II to disrupt consumption with rationing needed to ensure that the military had enough resources. Life didn’t really get back to normal until after the war when the victorious United States emerged as the world’s leading economy.

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The Great Depression Essay

The students learn about the events that led to the stock market crash, the concerns of the Depression, and the effects of the New Deal programs on the American people and the American economy. While reading and discussing these important issues in American History, the students choose an original Depression photograph [primary source] and create a story using historical facts. The project is one week in duration. A scoring guide and handout are utilized.

1. The student will conduct research using primary and secondary sources. 2. The student will write an essay using the provided format and criteria. 3. The student will present his/her work to class an an oral presentation.

Missouri Standards

Goal 1.2 Conduct research to answer questions and evaluate information and ideas. Goal 1.4 Use technological tools and other resources to locate, select, and organize information. Goal 2.1 Plan and make written, oral and visual presentations for a variety of purposes and audiences.

Kansas Standards

Benchmark 2: The student uses a working knowledge and understanding of individuals, groups, ideas, developments, and turning points in the era of the Great Depression through World War II in United States history (1930-1945).

The student:

1. (A) analyzes the causes and impact of the Great Depression (e.g., overproduction, consumer debt, banking regulation, unequal distribution of wealth).

2. (A) analyzes the costs and benefits of New Deal programs. (e.g., budget deficits vs. creating employment, expanding government: CCC, WPA, Social Security, TVA, community infrastructure improved, dependence on subsides).

3. (A) analyzes the debate over expansion of federal government programs during the Depression (e.g., Herbert Hoover, Franklin Delano Roosevelt, Alf Landon, Huey Long, Father Charles Coughlin).

Benchmark 3: The student writes technical text using the writing process.

1. Develops a technical text focused on one main purpose. (Ideas and Content: prewriting, drafting, revising: N,E,T,P)

2. Clearly defines the main idea with selection of concise, logical details that meet the reader’s informational needs. (Ideas and Content: prewriting, drafting, revising: N,E,T,P)

3. Analyzes and understands implications and consequences of plagiarism (e.g. ethical, legal, professional). (Ideas and Content: prewriting, drafting, revising: N,E,T,P)

4. Cites references for all sources of information and includes summarized and paraphrased ideas from other authors. (Ideas and Content: prewriting, drafting, revising: N,E,T,P)

5. Constructs a bibliography with a standard style of format (e.g. MLA, APA, etc.). (Ideas and Content: prewriting, drafting, revising: N,E,T,P)

6. Applies appropriate strategies to generate technical text (e.g. brainstorming, listing, webbing, working in pairs or cooperative groups, identifying information from print sources). (Organization:prewriting, drafting, revising: N,E,T,P)

7. Organizes information within each section, paragraph, list, or graphic in a logical and effective sequence to meet the reader’s informational needs. (Organization: prewriting, drafting, revising: N,E,T,P)

8. Composes a comprehensive piece with a constructive introduction, a relevant or sequential body, and a suitable conclusion. Organization: prewriting, drafting, revising: N,E,T,P)

9. Uses appropriate transitions to connect ideas within the piece (e.g. enumerated lists, bullets, headings, subheadings, complex outlining elements). (Organization: prewriting, drafting, revising: N,E,T,P

• http://www.infoplease.com/
• http://www.yahoo.com
• http://www.yahooligans.com
• Images in the Farm Security Administration-Office of War Information Collection (Library of Congress) America at the Crossroads - Great Photographs From the Thirties, Edited by Jerome Prescott, Smithmark, New York, 1995. American Odyssey, Gary Nash, Glencoe, New York, 1994. Highlights in American History, Grace Kachaturoff, Schaffer Publications, Torrance, California, 1995. Life During the Great Depression, Dennis Nishi, Lucent Books, San Diego, 1998.

The students will study the chapters on the Great Depression and Roosevelt’s New Deal using the school text American Odyssey. The class will read the text, complete guided readings, and study these issues while reading articles from Roosevelt’s Presidency and readings from Highlights in American History. The Depression Essay Project will be introduced during this unit. The use of primary sources and the need to access various Internet sources will enhance the learning process. Each student will choose a photograph from sources to include the KC Public Librarv Special Collection. The students can chose a photograph from the collections of Margaret Bourke-White or Dorothea Lange. Government archives have numerous photographs from the Depression. Additional historical information will be found by accessing Yahoo , Searchopolis , and Information Please Almanac. The students will gain additional knowledge about FDR by using the Project WhistleStop Web Site. After completing the research, the student will follow the format of the essay. The time frame will be distributed in order for the student to organize his/her time and information. A class period in the computer lab will be made available to the class. Each student will have the opportunity to share his/her insights in the form of an oral presentation.

DEPRESSION ESSAY

MAKE YOUR PHOTOGRAPH COME ALIVE!

In this project students will describe the life of a person or persons who suffered hardship and desperation during the Great Depression. The students will choose an authentic photograph from the Great Depression, which can be found using various resources. Students will describe the picture and give an identity to the person(s) in the picture and explain how the depression affected their life/lives. If a photograph is chosen without people, the students will create a person or family who lives [had lived] at the site. [The teacher will show several examples.] In addition, the student will explain how FDR’s New Deal helped restore, or did not restore, the lives of the individuals. A picture of the photograph must accompany the essay and its source documented. It is required that the students use proper mechanics and a five-paragraph essay format to tell this story. The format is as follows: Paragraph 1 This is a general paragraph that is interesting and captures the reader’s attention. Paragraph 2 This is the time to introduce the person [sl in the photo. Who is this? Where do/did they live? What was their life[s] like before the Depression? Paragraph 3 What was the Great Depression? Why did it occur? Explain how this person [s] was affected, and how the individual[s] came to be in the state as shown in the photograph. Paragraph 4 Explain what the New Deal was and how specific programs helped the person[s] in your photo. If there were negative aspects discuss and be specific. Paragraph 5 This is the conclusion of the essay. Describe what happened to the person[s] in the photograph. Describe lessons learned and/or how life[s] changed for this person[s].  

THIS IS THE TIME TO SHOW YOUR CREATIVE REPORTING TALENTS!

A scoring guide will be used to assess each student. The student will receive a copy of the scoring guide at the beginning of the project and a detailed explanation of the requirements of the project.

DEPRESSION ESSAY SCORING GUIDE

• Great Depression Essays

The Great Depression Essay

The recession of the American economy led to the greatest depression that has never been experienced in the American economic history. The Great Depression, experienced between 1929 and 1932, was a period of extreme hardship in America as it forced Americans to experience an economic crisis which left many jobless and hopeless. It was the worst and longest difficult situation in the country’s economic history that threw many hardworking people into poverty. People lost their homes, farms as well as their businesses (Gunderson 4). The Great Depression led to economic stagnation and widespread unemployment and also the depression was experienced in virtually all in every major industrialized country (Hall and Ferguson 2). The impact of the Great Depression was devastating as many individuals lost their homes because they had no work and a steady income and as a result, most of them were forced to live in makeshift dwellings with poor condition and sanitation. Many children dropped out of school and married women were forced to carry a greater domestic burden. More so, the depression widened the gap between the rich and the poor (Freedman 14) because many poor individuals suffered the hardships during this period while the rich remained unaffected. This paper discusses the period of Great Depression and it covers the life during this time and how the city dwellers, farmers, children and minority groups were affected. The Great Depression started following the occurrence of the Wall Street crash and rapidly spread in different parts of the world; however, some have argued that it was triggered by mistakes in monetary policy and poor government policy (Evans 15). Different hardships and challenges were experience by individuals in different parts of the world with many people left with no work. More so, individuals especially farmers suffered from poverty and low profits, deflation and they had no opportunity for personal and economic growth. Notably, different people were affected differently, for instance, unemployment affected men and they were desperate for work while children were forced to leave school and search for something to do so as to earn money for their family. Farmers were greatly affected because this period led to decrease in price in the prices of their crops and livestock and they still worked hard to produce more so as to pay their debts, taxes and living expenses. The period before this economic crisis, farmers were already losing money due to industrialization in cities and so most of them were renting their land and machinery. When the depression started, prices on food produced by farmers deflated leaving them incapable of making profit and so they stopped selling their farm products and this in turn affected the city dwellers that were unable to produce their own food. Undoubtedly, after the stock market crash, many firms declined and many workers were forced out of their jobs because there were really no jobs. Moreover, many people had no money to purchase commodities and so the consumer demand for manufactured goods reduced significantly. Sadly, individuals had to learn to do without new clothing. The prices dropped significantly leaving farmers bankrupt and as a result most of them lost their farms. Some farmers were angry and desperate proposing that the government should intervene and ensure that farm families remain in their respective homes. But again, farmers were better off than city dwellers because they could produce much of their own food. Many farm families had large gardens with enough food crops and in some families, women made clothes from flour and feed sacks and generally, these farm families learned how to survive with what they have and little money.

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Furthermore, the town and cities suffered too, for instance, as the factories were shutting down following the depression many industrial workers were left jobless. The life in the city was not easy as many individuals lived in overcrowded and unheated houses with poor sanitation. In addition, many firms closed and many individuals lost their jobs and had to deal with the reality of living in poverty. Town families were unable to produce their own food and so many city dwellers often went hungry during this period. During winter, they had hard times overcoming the cold because they had no money to buy coal to warm their houses. During the depression, the known role of women was homemaking because they had a difficult time finding jobs and so the only thing they were supposedly good at was preparing meals for their families and keeping their families together. Some women who managed to have jobs supported their families in overcoming this difficult time. Accordingly, many children were deprived their right to have access to quality education because many societies had to close down their schools due to lack of money. Some of them managed to be in schools but majority dropped out. More so, they suffered from malnutrition and those in rural areas were worse off because with the family’s low income, they were unable to purchase adequate nutritional food for all family members. Many children and even adults died from diseases and malnutrition (Gunderson 4). The minority groups in America especially the African American population who lived in rural areas working on the farms of white owners. Even though they lived in poverty, the Depression made the situation worse as their lived changed completely and remained extremely poor because the farmers they were working for had lost their land. All in all, many families struggled to leave on low incomes or no jobs with many children starving; lacked shelter and clothing as well as medical attention (Freedman 4).

In conclusion, the Great Depression was a tragic time in American history that left many people poor, unemployed or little pay, and children forced to work at a younger age. The Great Depression affected everyone from children to adults, farmers to city dwellers and so everyone’s lives changed drastically by the events experienced during this period. Many individuals were unemployed and remained desperate searching for better lives. In addition, children had no access to quality education as most of them left school and sadly they accompanied their mothers to look for work and search for a new life. However, some people particularly the employers and the wealthy were not affected during this period because they were protected from the depression with their position in the society.

Works Cited

Evans, Paul. “What Caused the Great Depression in the United States?” Managerial Finance 23.2 (1997): 15-24.

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Freedman, Russell. Children of the Great Depression. New York: Clarion Books, 2005. Print.

Gunderson, Cory G. The Great Depression. Edina, Minn: ABDO Pub, 2004. Internet resource.

Hall, Thomas E, and Ferguson J D. The Great Depression: An International Disaster of Perverse Economic Policies. Ann Arbor: University of Michigan Press, 1998. Internet resource.

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Causes of the Great Depression

The Great Depression was a significant economic downturn that affected the well-being of multiple nations, businesses, industries, and families worldwide. Great Depression perpetuated unemployment due to mass layoffs of workers and a reduction in investment and consumer spending, resulting in a massive reduction in industrial output, depreciation of the agricultural market, and currency decline. Consequently, President Franklin Roosevelt developed the New Deal Legislation to facilitate reform, recovery, and relief of the American economy, ultimately spearheading the end of the Great Depression in 1939. The leading causes of the Great Depression were the stock market crash, the failures of the Federal Reserve System and the collapse of the banking sector.

The Stock Market Crash

In 1929, the economic impacts of the stock market crash kicked off the Great Depression. Numerous social, political, and social changes marked the early and mid-1920s. In particular, consumer spending rapidly increased in the United States. Besides, countless American corporations produced goods in mass to match consumer demand. Technology also drastically improved, facilitating innovations of new products such as washing machines, refrigerators, and radios which broadened the market and boosted the gross domestic product. After observing the increased revenue in businesses and new investment opportunities, individuals from diverse economic backgrounds began rapidly investing in the stock market (Robbins, 2011). Also, stockbrokers permitted individuals to purchase stocks on margin since the cost of shares was progressively rising. However, in the spring of 1929, industries encountered overproduction, resulting in surplus products in the market and reduced consumer spending. Despite the resultant slowdown in production, the stock prices rose before reaching their peak on September 3, 1929. On Black Thursday, dated October 24, 1929, the stock market began to crash, marked by investors panicking and starting to sell their shares (Robbins, 2011). The crash rendered the shares worthless, making investors who had bought shares impoverished. In this view, the stock market crash led to an economic downturn that triggered the Great Depression.

Following the stock market crash, economic turmoil increased, paving the way for the worsening of the Great Depression. In particular, companies began to lay off workers, manufacturers reduced production, and consumer spending reduced. Besides, the salaries of employed individuals were cut, rendering them incapable of sufficiently providing for their families (Benmelech et al., 2019). As a result, numerous Americans began to sell their property and lost their residences to foreclosure. Since individuals’ investments had been rendered worthless, their savings depleted or diminished, and access to credit became tight, bringing companies’ and consumers’ spending to a standstill (Benmelech et al., 2019). Consequently, individuals could not pay for properties they had bought through hire purchase, resulting in evictions and repossessions. Besides, the reduction in purchasing power drastically increased the amount of unsold inventory, resulting in the collapse of multiple businesses. Against this backdrop, the economic impacts of the stock market crash deepened the Great Depression.

Failure by the Federal Reserve System and the Banking Sector

The banking system failure also perpetuated the Great Depression. Following the stock market crash, numerous individuals panicked and swiftly withdrew their money from their bank accounts. Before the stock crash, banks had taken part in speculation purchasing by using investors’ money and lending it to third parties to purchase stocks (Texas Getaway, n.d.). After the stock market crash, individuals anticipated an urgent bank failure. Consequently, their mass withdrawals resulted in the closing of thousands of banks. As of 1933, almost half of the United States banks had failed. This led to the intensification of the Great depression.

Additionally, the Federal Reserve System (Fed) adopted monetary policies which perpetuated the Great Depression. For instance, the Fed raised interest rates to counter the rapid stock market speculation between 1928 and 1929 (Texas Getaway, n.d.). This resulted in a reduction in consumer spending. Furthermore, the Fed failed to inhibit banking panics witnessed between 1930 and 1933. Additionally, the Fed only offered aid to its constituent banks or those having sufficient collateral (Romer, 1990). As a result, numerous banks failed to access the much-needed bailout, resulting in their mass closure. Furthermore, the Federal Reserve System enacted policies that made numerous United States citizens depreciate their confidence in the banking system, resulting in mass cash withdrawals from bank accounts and intensifying the Great Depression. The policy mistakes made by the Fed in response to the global recession only intensified its impacts.

In summary, the stock market crash and the failures of the Federal Reserve System and the banking sector were the leading proponents of the Great Depression. The stock market crash in 1929 compelled numerous investors to sell their shares, resulting in the mass layoff of workers, slowed-down production, and reduced consumer spending. Furthermore, collapse of the banking sector made numerous individuals panic and swiftly withdraw their money from their bank accounts, deepening the Great Depression. Besides, the Federal Reserve System enacted unfavorable monetary policies, which made most citizens lose confidence in the banking system and rapidly withdraw their bank account balances, fueling the Great Depression.

• Benmelech, E., Frydman, C., & Papanikolaou, D. (2019). Financial frictions and employment during the Great Depression.  Journal of Financial Economics ,  133 (3), 541-563. https://doi.org/10.1016/j.jfineco.2019.02.005
• Robbins, L. (2011).  The Great Depression . Transaction Publishers.
• Romer, C. D. (1990). The great crash and the onset of the Great Depression.  The Quarterly Journal of Economics ,  105 (3), 597-624. https://doi.org/10.2307/2937892
• Texas Getaway (n.d.). Introduction—What is the Great Depression?. https://www.texasgateway.org/resource/causes-great-depression
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The Causes and Effects of The Great Depression

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During the late 1920s and early 1930s, the world witnessed one of the most devastating economic crises in modern history – the Great Depression. The depression lasted for over a decade and heavily impacted countries across the [...]

The unemployment rate rose sharply during the Great Depression and reached its peak at the moment Franklin D. Roosevelt took office. As New Deal programs were enacted, the unemployment rate gradually lowered. ( Bureau of Labor [...]

Famed American novelist F. Scott Fitzgerald could not have anticipated what was on the horizon when he penned The Great Gatsby in 1925. Fitzgerald was no prophet, but he seemed to have an innate sensibility that allowed him to [...]

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SS.912.A.5.11

8 Tutorials

8 Lesson Plans

6 Original Student Tutorials

3 Text Resources

2 Video/Audio/Animations

2 Assessments

1 Resource Collection

• Original Student Tutorials Social Studies - U.S. History - Grades 9-12 3
• Integrated Social Studies with Civics Original tutorials - Grades 6-12 2

This benchmark is annually evaluated on the United States History End-of-Course Assessment. For more information on how this benchmark is evaluated view the United States History End-of-Course Assessment Test Item Specifications pages 37-39 . Additional resources may be found on the FLDOE End-of-Course (EOC) Assessments webpage and the FLDOE Social Studies webpage.

Related Courses

Related access points, related resources, assessments.

Test your knowledge of the "Roaring Twenties" with a 9-question multiple choice quiz provided by Khan Academy. Good luck!

Type: Assessment

Test your knowledge of the Great Depression and the New Deal with this 15-question multiple choice quiz provided by Khan Academy. Good luck!

Lesson Plans

In this lesson students will examine the history of the Federal Communications Commission to include when the FCC was created, the legislation passed to create the agency, its purpose, how it has changed over the years and expanded as technology has advanced, and how it continues to be used today. Students will also create a billboard demonstrating their understanding of the F.C.C. and their role in society since its creation.

Type: Lesson Plan

Students will read excerpts and analyze the fireside chats broadcasted during the Great Depression. Broadcasts will highlight President Franklin D. Roosevelt's New Deal focusing on Fair Labor Standards Act (minimum wage) and child labor laws. 

In this lesson, students will become familiar with Franklin D. Roosevelt and his use of the radio to communicate with the American people one of the New Deal programs, Social Security. 

In this lesson, students will become familiar with Franklin D. Roosevelt and his use of the radio to calm and reassure citizens during the Great Depression. Students will focus on the fireside chat addressing drought conditions and policies to aid farming. 

In this lesson, students will become familiar with Franklin D. Roosevelt and his use of the radio to calm and reassure citizens during the Great Depression. Students will focus on the first chat addressing the banking crisis. 

In 1939, Hurston went to Cross City in Dixie County, Florida, to interview workers of the Aycock and Lindsay turpentine camp. Turpentine camps were isolated and known for their terrible working conditions and abuses. It was unusual for a writer to be allowed in to gather information. Hurston's essay, entitled "," is one of the few firsthand accounts written about the lives of the turpentine workers.

In this lesson, students will examine the essay, "" as a primary source document using the document analysis worksheet from the National Archives.

In this lesson, designed to follow a more general study of the New Deal, students analyze primary and secondary source documents and engage in a Structured Academic Controversy in an effort to answer the central historical question: Was the New Deal a success or a failure? Students receive 7 documents, including a "fireside chat" by FDR, an oral interview, a speech by a WPA representative, unemployment statistics, and song lyrics by the Carter Family. Students then divide into groups of 4 and into pairs within each group to analyze the documents using a graphic organizer. Each pair presents the argument to the other that the New Deal was either (Pair A) successful or (Pair B) a failure. Only at the end can students abandon their previous positions, reach consensus in writing as a group, and defend that view in a final class discussion.

In this lesson, students analyze primary and secondary source documents in an effort to answer the central historical question: Which historical account of Social Security is more accurate? Students begin by responding to a prompt: should out-of-work Americans receive government assistance? The teacher then streams a video on the New Deal and its critics, including Huey Long, followed by discussion. Students then look at the summarized views of 2 historians, Carl Degler and Barton Bernstein. In pairs, students summarize and discuss. They then read 3 primary source documents: 1) a 1935 speech by FDR, 2) the testimony of NAACP spokesman Charles Houston before Congress, and 3) a letter to Mrs. Roosevelt by an anonymous critic of Social Security. For each, students answer guiding questions. In a final class discussion, students corroborate the documents and use them to side with the views of 1 historian-Degler or Bernstein-over the other.

Learn about President Franklin D. Roosevelt's use of the radio to communicate New Deal policies that are still relevant with this interactive tutorial.

Type: Original Student Tutorial

Learn about the history, purpose, and impact of the National Labor Relations Board with this interactive tutorial.

Explore the purpose, role, and impact of the Federal Communications Commission (F.C.C.) with this interactive tutorial.

In Parts 1 and 2 of this interactive tutorial series, learn about the famous first hundred days of Franklin D. Roosevelt's presidency.  You'll learn how FDR and his fellow New Dealers used government in an attempt to combat the worst economic disaster the U.S. has ever faced: The Great Depression.  

CLICK HERE  to open Part 1.

In Parts 1 and 2 of this interactive tutorial series, learn about the famous first hundred days of Franklin D. Roosevelt's presidency. You'll learn how FDR and his fellow New Dealers used government in an attempt to combat the worst economic disaster the U.S. has ever faced: The Great Depression.

CLICK HERE  to open Part 2.

In this interactive tutorial, learn about the economy of the 1920s, a decade often called the "Roaring Twenties." You'll explore consumerism, advertising, the auto industry, and the stock market, as well as how the 1920s boom contributed to the Great Depression.

Resource Collection

This full-length video is a complete biography of Franklin D. Roosevelt, 32nd President of the United States. Topics touched on include the Great Depression, the New Deal, and World War II. Teachers should find the video an excellent resource to review or learn more about this time period.

The webpage also includes numerous shorter videos, articles, and primary sources about FDR, as well as a teacher's guide for using the film in class.

Type: Resource Collection

Text Resources

Learn more about the 1935 landmark Supreme Court decision Schechter v.U.S. In this Depression-era case, the Court ruled against one of the key parts of President Franklin D. Roosevelt's New Deal: the National Industrial Recovery Act (NIRA). Issues of economics, capitalism, and government power were all at stake.

Type: Text Resource

This informational text resource is intended to support reading in the Social Studies content area. It is most appropriate for 6th-8th grade students enrolled in a U.S. History class. In this essay, the author details the Depression-era Civilian Conservation Corps, explaining to readers how the organization formed, functioned and operated during its heyday in the 1930s.

This informational text resource is intended to support reading in the Social Studies content area. It is most appropriate for 9th-10th grade students enrolled in a U.S. History class. The author explains the causes of, and the attempted solutions to, the 1930s-era environmental catastrophe known as the Dust Bowl.

Learn about President Franklin D. Roosevelt's New Deal legislation that transformed the American government during the Great Depression. This short video describes several programs of the New Deal including the Tennessee Valley Authority (TVA), the Civilian Conservation Corps (CCC), and the National Recovery Administration (NRA).

Type: Tutorial

Learn about President Franklin D. Roosevelt's efforts to stimulate the economy and combat unemployment during the Great Depression. This short video describes several programs from Roosevelt's New Deal including the National Youth Administration, the Rural Electrification Administration, and the Works Progress Administration.

View a brief, funny video about our 31st President, Herbert Hoover, a president known as a great organizer but a terrible politician.

View a brief, funny video about the 32nd President, Franklin D. Roosevelt, a man who ushered the U.S. out of the Great Depression and into World War II. Enjoy this quick trip through American history!

In this webisode brought to you by PBS, you will explore key events that took place leading up to and during the Great Depression and World War II. You can explore primary source documents and photographs, a timeline and a glossary, take a quiz, and investigate additional resources to learn more about these eras. Enjoy this journey into American history!

In this tutorial, you will view a brief video about the purpose and function of the Civilian Conservation Corps (CCC). The CCC was created by President Roosevelt through the New Deal program to promote economic growth and create jobs across the nation during the Great Depression.

In this tutorial video, you will take a whirlwind journey through the New Deal, which was Franklin D. Roosevelt's plan to pull the United States out of the Great Depression of the 1930s. The New Deal consisted of a series of programs that were designed to provide relief, recovery, and/or reform. The video briefly describes a number of the New Deal programs, including the Social Security Act, the Public Works Administration, the Works Progress Administration, and the Agricultural Adjustment Act. The video also describes how the New Deal forever changed the relationship between the government and citizens of the United States. Enjoy this "crash course" in U.S. History!

In this tutorial video, you will take a whirlwind journey through the events that led up to the Great Depression. The video explores the possible causes of the Great Depression, including the economic, social and political changes that may have contributed to this financial crisis. The video also examines what took place after the Great Depression began, including the failure of many banks and massive unemployment across the nation. Enjoy this "crash course" in U.S. History!

Video/Audio/Animations

Learn how to "think like a historian" in this brief video from Khan Academy. Your hosts analyze in detail President Franklin D. Roosevelt's First Inaugural Address, in which he told the American people, "The only thing we have to fear is fear itself."

Type: Video/Audio/Animation

Learn how to "think like a historian" in this brief video from Khan Academy. Your hosts explain the difference between primary and secondary sources and analyze the beginning of President Franklin D. Roosevelt's First Inaugural Address.

Original Student Tutorials Social Studies - U.S. History - Grades 9-12

Integrated social studies with civics original tutorials - grades 6-12, student resources, text resource, parent resources.

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