Great Depression

Definition

The Great Depression was a severe worldwide economic downturn that began in 1929 and lasted through the late 1930s, marked by widespread unemployment, significant declines in industrial production, and deflation. This period dramatically reshaped American society and led to major changes in government policies and labor movements.

5 Must Know Facts For Your Next Test

1. The Great Depression began with the stock market crash in October 1929, leading to a massive loss of wealth and confidence among consumers and investors.
2. Unemployment reached an estimated 25% in the United States at its peak, causing widespread hardship for families and communities.
3. The agricultural sector was particularly hard hit, with many farmers facing foreclosure due to falling prices and inability to pay debts.
4. Bank failures were rampant during the Great Depression, resulting in loss of savings for many individuals and contributing to a lack of trust in financial institutions.
5. The Federal Reserve's policies before and during the Great Depression have been criticized for exacerbating the economic downturn rather than alleviating it.

Review Questions

• How did the Great Depression influence labor movements like the Knights of Labor and the Congress of Industrial Organizations?
  • The Great Depression significantly impacted labor movements as workers faced unprecedented unemployment and wage cuts. Organizations like the Knights of Labor sought to unite workers across various trades, while the Congress of Industrial Organizations emerged to organize unskilled workers into effective unions. The dire economic conditions galvanized workers to demand better pay and working conditions, leading to increased union activity and strikes during this tumultuous time.
• Discuss how fiscal and monetary policies were utilized during the Great Depression to address economic challenges.
  • During the Great Depression, fiscal policies involved increased government spending on public works programs aimed at job creation and economic stimulation. Monetary policies included lowering interest rates and expanding the money supply to encourage borrowing and investment. These strategies were part of broader efforts under the New Deal to mitigate unemployment and revitalize industries affected by the economic downturn.
• Evaluate the long-term effects of the Great Depression on American trade policies and international monetary systems.
  • The Great Depression led to a shift in American trade policies, as protectionist measures like tariffs were enacted to safeguard domestic industries but ultimately worsened global economic conditions. The U.S. withdrew from international commitments, leading to a fragmented international monetary system characterized by competitive devaluations. The lessons learned from this period eventually shaped post-World War II agreements aimed at fostering economic cooperation, such as the Bretton Woods system, which sought to prevent similar crises in the future.

Related terms

Stock Market Crash of 1929: The sudden and dramatic decline of stock prices on the New York Stock Exchange in late October 1929, which is often cited as the beginning of the Great Depression.

New Deal: A series of programs and reforms introduced by President Franklin D. Roosevelt aimed at promoting economic recovery, providing relief for the unemployed, and reforming financial systems during the Great Depression.

Unemployment Rate: The percentage of the labor force that is jobless and actively seeking employment, which soared to unprecedented levels during the Great Depression.