Great Depression: 1929–1938

Overview

Description

The American economy of the 1920s appeared to be strong. The stock market was booming, and American consumerism had grown considerably through the decade. However, beneath the glimmering surface of the Roaring Twenties lurked a much bleaker reality. Overinflated stock prices, growing consumer debt, overproduction, and a crisis in the nation's agricultural sector positioned the country for a massive economic collapse. The Great Depression was ultimately triggered by the stock market crash in 1929. This spiraling economic downturn would persist through the 1930s as millions of Americans lost their jobs, homes, and savings. The country's economic decline led to the election of Franklin Roosevelt in 1932. Through his New Deal programs and policies, Roosevelt broadened the scope of government intervention and regulation of the nation's economy. While providing aid and jobs to Americans, Roosevelt actively worked to increase governmental oversight of the financial sector.

At A Glance

  • The stock market crash of 1929 was the result of numerous factors, including unchecked speculation—or high-risk investments with the hope of future profits—chancy stock purchases on margin, and increased consumer debt.
  • Effects of the crash and depression included loss of savings, jobs, and homes, as well as the collapse of banks.
  • President Herbert Hoover favored a constrained approach to federal intervention in the Great Depression, focusing his efforts on stimulating business in lieu of offering direct aid to citizens.
  • The Dust Bowl of the 1930s was the result of years of poor farming techniques and drought that caused soil erosion and bred massive dust storms in the center of the country.
  • By 1932 the Democratic Party was adding recent immigrants as well as African Americans to its membership rolls, thereby widening the party's scope beyond Southern Democrats.
  • In 1932 Republican incumbent Herbert Hoover lost the presidential election to Democrat Franklin Delano Roosevelt, largely because of the deepening depression and the Bonus Army scandal.
  • Encompassed in Roosevelt's New Deal (1933−34) were legislation and a series of programs geared toward providing aid, regulating the financial system, and facilitating economic recovery during the Great Depression.
  • Referred to as the "alphabet agencies," the New Deal established numerous programs to put Americans back to work, including the Civilian Conservation Corps, the Tennessee Valley Authority, the Agricultural Adjustment Administration, and the Works Progress Administration.
  • Franklin Delano Roosevelt and his administration introduced numerous banking and financial sector reform measures to help correct the Great Depression and prevent a similar depression from occurring.
  • Agencies like the FDIC and SEC created a regulatory framework to protect investors, increase oversight on national banks, make credit more readily available, promote thrift, and improve the transparency of the stock market.
  • The National Labor Relations Act, the Fair Labor Standards Act, the Housing Act, and the Indian Reorganization Act were controversial policies under the Second New Deal (1935−38).
  • The Social Security Act (1935) and Fair Labor Standards Act (1938) created a social welfare system that greatly expanded the roles of government and the presidency yet failed to end the Great Depression.
  • As the Depression lingered, opponents of the New Deal proposed alternate plans, and some New Deal programs were found unconstitutional.