The Great Depression
The Great Depression was the worst economic crisis in modern American history, bringing mass unemployment, poverty, and political change.
Causes
The Depression had multiple causes: the stock market crash; thousands of bank failures that wiped out savings and credit; overproduction and weak demand due to inequality; collapsing farm prices; high tariffs such as the Smoot-Hawley Tariff (1930) that worsened world trade; and a Federal Reserve that let the money supply shrink.
Scale of the collapse
Between 1929 and 1933, US output fell by about a quarter, about 9,000 banks failed, and unemployment reached about 25% by 1933. Prices fell sharply (deflation), raising the real burden of debts. Many who kept jobs faced wage cuts and reduced hours.
Life in the Depression
Families lost homes and farms. Shantytowns of the homeless, nicknamed 'Hoovervilles', grew in cities. Soup kitchens and breadlines fed millions. Many young people rode freight trains looking for work. Families doubled up, delayed marriage, and had fewer children.
The Dust Bowl
In the 1930s, drought and poor farming practices on the southern Great Plains caused massive dust storms. Topsoil blew away, crops failed, and hundreds of thousands of people, often called 'Okies', migrated west, especially to California, as described in John Steinbeck's The Grapes of Wrath (1939).
Hoover's response
President Herbert Hoover believed in voluntary cooperation and limited federal relief. He created the Reconstruction Finance Corporation (1932) to lend to banks and businesses, but resisted direct aid to individuals. In 1932, the army forcibly removed the Bonus Army, unemployed veterans demanding early payment of a promised bonus, from Washington, damaging Hoover's reputation.
Unequal impact
The Depression hit Black Americans especially hard: they were often 'last hired, first fired', and Black unemployment far exceeded white unemployment. Mexican Americans faced deportation campaigns in which hundreds of thousands, including many US citizens, were pressured or forced to leave.
The election of 1932
Franklin D. Roosevelt, governor of New York, won the 1932 election by a landslide, promising a 'New Deal' for the American people. In his first inaugural address in March 1933, he declared that 'the only thing we have to fear is fear itself'.
Worked example
A family farm in Oklahoma in 1934 faces wheat prices too low to cover costs, a bank loan it cannot repay, and dust storms burying its fields. The bank forecloses. The family loads a truck and drives Route 66 to California, where they find only seasonal fruit-picking work at low wages and are often unwelcome.
Key takeaways
The Depression stemmed from the crash, bank failures, inequality, farm distress, high tariffs, and a shrinking money supply. Output fell by a quarter, about 9,000 banks failed, and unemployment hit about 25%. Hoovervilles and breadlines marked daily life; the Dust Bowl drove migration west. Hoover's limited response and the Bonus Army episode hurt him. Black and Mexican Americans suffered disproportionately. FDR won in 1932 promising a New Deal.
Flashcard
About 9,000, 1930-1933
Check your understanding
About what was the US unemployment rate at the depth of the Great Depression in 1933?