Great Depression

Definition

The Great Depression was a severe worldwide economic downturn that lasted from 1929 to the late 1930s, marked by massive unemployment, widespread poverty, and a significant decline in economic activity. It had profound impacts on labor movements, government policy, and the financial sector, reshaping the American economy and society during and after this tumultuous period.

5 Must Know Facts For Your Next Test

1. The Great Depression began with the stock market crash in October 1929, leading to a decade-long economic crisis.
2. Unemployment reached unprecedented levels during the Great Depression, peaking at around 25%, which devastated families and communities across the country.
3. The New Deal introduced by Franklin D. Roosevelt included programs like Social Security and public works projects, significantly altering the relationship between government and economy.
4. Farmers faced extreme hardships during the Great Depression, exacerbated by drought conditions leading to the Dust Bowl, further displacing many rural families.
5. The Great Depression led to major changes in labor relations, with increased support for unions as workers sought better wages and conditions amid widespread economic hardship.

Review Questions

• How did the Great Depression influence labor movements and working conditions during the 1930s?
  • The Great Depression had a significant impact on labor movements as widespread unemployment forced workers to organize for better wages and job security. Many labor unions gained traction during this period as workers faced dire conditions and sought collective bargaining rights. The economic hardship of the era highlighted the need for improved working conditions, leading to a surge in union membership and activism as workers fought for their rights.
• In what ways did New Deal programs transform business practices and government involvement in the economy during the Great Depression?
  • New Deal programs fundamentally transformed business practices by increasing government intervention in the economy. Initiatives like the Securities Exchange Act aimed to regulate financial markets and prevent future crashes. The establishment of agencies such as the Works Progress Administration (WPA) created jobs while promoting public infrastructure projects, reshaping how businesses operated and interacted with government entities. This shift laid the groundwork for a more active role of government in economic management.
• Evaluate the long-term effects of banking and financial sector reforms implemented after the Great Depression on modern economic practices.
  • The banking and financial sector reforms enacted in response to the Great Depression have had lasting effects on contemporary economic practices. Reforms like the Glass-Steagall Act established regulations that separated commercial banking from investment banking, aiming to reduce risk in financial markets. Although some provisions were later repealed, the foundational principles of these reforms influenced modern regulatory frameworks. The focus on consumer protection and stability in financial institutions continues to shape policies today, reflecting lessons learned from the catastrophic failures of the Great Depression.

Related terms

Stock Market Crash of 1929: A dramatic collapse of stock prices that triggered the Great Depression, starting with Black Tuesday on October 29, 1929, which led to widespread financial panic.

New Deal: A series of programs and reforms introduced by President Franklin D. Roosevelt in response to the Great Depression aimed at economic recovery and social reform.

Unemployment Rate: The percentage of the labor force that is jobless and actively seeking employment, which soared during the Great Depression, reaching about 25% at its peak.