The Great Depression was the most severe and prolonged economic downturn in modern history, lasting roughly from 1929 to 1939. It began with the stock market crash on October 29, 1929—known as Black Tuesday—and quickly spiraled into a global crisis.
Causes of the Depression
- Stock Market Crash of 1929: Triggered a loss of confidence and massive declines in investment and spending.
- Banking Panics: Thousands of banks failed, wiping out savings and reducing the availability of credit.
- High Consumer Debt & Overproduction: Unsustainable borrowing and excess supply led to falling prices and profits.
- Smoot-Hawley Tariff Act (1930): Imposed steep tariffs, prompting retaliatory measures that crippled global trade.
- Gold Standard Constraints: Limited monetary flexibility, worsening the downturn internationally.
- Effects on America
- GDP Decline: U.S. gross domestic product fell by 30% between 1929 and 1933.
- Unemployment: Peaked at over 25%, leaving millions jobless.
- Bank Failures: About 20% of banks collapsed by 1933.
- Deflation: Prices plummeted, deepening the economic crisis.
- Political Shifts
- End of Laissez-Faire Economics: The crisis led to a reevaluation of government’s role in the economy.
- Rise of the New Deal: Franklin D. Roosevelt’s sweeping reforms included Social Security, labor protections, and public works programs.
- Realignment of American Politics: The New Deal coalition reshaped party loyalties and expanded federal power.
- Long-Term Legacy
- Strengthened Federal Government: Agencies like the FDIC and SEC were created to stabilize banking and markets.
- Social Safety Nets: Programs like unemployment insurance and Social Security became permanent fixtures.
- Cultural Reflection: Art, literature, and photography (e.g., Dorothea Lange’s Migrant Mother) captured the era’s struggles
Lesson Learning 