Great Depression

Definition

The Great Depression was a severe worldwide economic downturn that lasted from 1929 until the late 1930s, marked by extreme unemployment, plummeting stock markets, and widespread poverty. It profoundly impacted nations and economies, leading to significant social and political changes, and laid the groundwork for future economic policies and global relations.

5 Must Know Facts For Your Next Test

1. The Great Depression began with the Stock Market Crash of 1929, which wiped out millions of investors and caused banks to fail.
2. Unemployment rates soared during the Great Depression, reaching about 25% in the United States at its peak.
3. The economic crisis had global effects, leading to a decrease in international trade and contributing to political instability in several countries.
4. In response to the Great Depression, governments implemented various policies, with the New Deal being one of the most significant efforts to stimulate recovery in the U.S.
5. The cultural impact of the Great Depression was profound, influencing art, literature, and music as people sought to express their struggles and hopes.

Review Questions

• How did the Stock Market Crash of 1929 contribute to the onset of the Great Depression?
  • The Stock Market Crash of 1929 played a critical role in initiating the Great Depression by erasing vast amounts of wealth for individuals and businesses alike. This crash led to panic selling, which caused stock prices to plummet further. The resulting loss of confidence in financial institutions prompted widespread bank failures and a sharp decline in consumer spending, ultimately spiraling economies into a deep recession.
• Evaluate the effectiveness of Franklin D. Roosevelt's New Deal in addressing the challenges posed by the Great Depression.
  • Franklin D. Roosevelt's New Deal was instrumental in providing relief, recovery, and reform during the Great Depression. It introduced numerous programs aimed at stabilizing the economy, such as creating jobs through public works projects and establishing social safety nets like Social Security. While some critics argue that it did not fully end the economic downturn until World War II began, many historians recognize that it helped restore hope and provided crucial support for struggling Americans during this challenging period.
• Analyze the long-term impacts of the Great Depression on global economics and politics in subsequent decades.
  • The Great Depression had lasting effects on global economics and politics that reshaped nations' policies for years to come. Economically, it led to a reevaluation of capitalist practices, resulting in increased government intervention in economies worldwide. Politically, it fueled extremist movements in several countries as disillusionment with traditional political systems grew; this was evident in Europe where fascism gained traction. The lessons learned during this period influenced post-World War II economic policies and international relations, leading to a greater emphasis on cooperation through institutions like the International Monetary Fund (IMF) and World Bank.

Related terms

Stock Market Crash of 1929: A major stock market crash that occurred in late October 1929, leading to the loss of billions in wealth and triggering the Great Depression.

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

Dust Bowl: A severe drought in the 1930s that exacerbated the economic struggles of farmers in the Great Plains, contributing to mass migration and hardship.