The Great Crash, the Great Depression and the New Deal, from the 1920s to 1941

The Great Crash, the Great Depression and the New Deal, from the 1920s to 1941

The Great Crash (1929)

  • The roaring 1920s, a decade of economic growth and prosperity in the USA, ended with the Stock Market Crash on October 24, 1929, known as Black Thursday. This ignited the beginning of the Great Depression.

  • Over-speculation and buying on margin, as well as poor banking structures, led to an unstable stock market and eventually the crash. A massive stock sell-off occurred, causing panic.

  • The Smoot-Hawley Tariff Act of 1930 deepened the crisis. Aimed at protecting American Economy by raising tariffs on imported goods, it eventually led to a trade war and a decrease in international trade.

The Great Depression (1929-1939)

  • The Great Depression was the longest, deepest, and widest economic crisis of the 20th century. Unemployment rose to 25% and rural areas experienced the devastating Dust Bowl conditions.

  • President Herbert Hoover’s response to the crisis was seen as inadequate. His reliance on voluntary action from businesses and his belief in ‘rugged individualism’ were out of step with the scale of the crisis.

  • Breadlines and Hoovervilles (shanty towns) became a common sight as people lost their jobs and homes. The economic woes led to significant social and cultural shifts in American society.

The New Deal (1933-1939)

  • President Franklin D. Roosevelt introduced the New Deal in response to the economic crisis, characterised by the mantra of Relief, Recovery, and Reform.

  • The Relief measures included the Federal Emergency Relief Act and the creation of Civilian Conservation Corps to provide immediate help to those suffering.

  • The Recovery efforts focused on stabilising the economy - National Industrial Recovery Act, Agricultural Adjustment Act, and the establishment of the Tennessee Valley Authority aimed to increase prices, wages, and demand.

  • Reforms meant to prevent future depressions included the Glass-Steagall Act which established the Federal Deposit Insurance Corporation, and Securities Act to regulate Wall Street.

  • The New Deal transformed the role of the federal government in American life, granting it greater power and responsibility.

Interconnected note: Understand the whole period as a cycle from boom to bust to recovery. The Great Depression had a profound impact on American society, influencing its economy, its culture, and the role of government in subsequent decades.