The 1920s, often called the Roaring Twenties, were a time of great excitement and economic growth in the United States. People enjoyed jazz music, new fashion trends, and a booming economy. However, this period of prosperity was followed by a severe economic downturn known as the Great Depression.
In early 1928, the U.S. economy was doing well, and many people were investing in the stock market. Although there was a small crash in the spring, it didn’t worry people too much. But by the fall, the stock market started to decline. On October 24, 1929, known as Black Thursday, the market dropped by 11%. Panic set in as people rushed to sell their stocks. The situation worsened on October 28 and 29, with the market dropping even further, leading to massive financial losses.
Some experts believe that the Federal Reserve, which was still relatively new at the time, played a role in the crash. During the 1920s, the Fed allowed a lot of money to flow into the economy, which led to inflation. After the crash, the Fed reduced the money supply, causing banks to fail across the country.
As banks collapsed and panic spread, President Herbert Hoover was hesitant to intervene, believing the economy would fix itself. However, Congress passed the Smoot-Hawley Tariff Act in 1930, which imposed high taxes on foreign goods. This backfired, as other countries retaliated by reducing trade with the U.S., worsening the depression.
In 1933, Franklin Delano Roosevelt (FDR) became president, promising to help the struggling American people. He introduced the New Deal, a series of programs aimed at reviving the economy. FDR communicated with the public through his Fireside Chats, reassuring them that the government was taking action.
The New Deal included initiatives like the Federal Emergency Relief Act, the Agricultural Adjustment Act, and the Civilian Conservation Corps. These programs aimed to provide relief to the poor, support farmers, regulate the stock market, and create jobs. Later, the Wagner Labor Relations Act and the Social Security Act focused on workers’ rights and social welfare.
FDR faced opposition from the Supreme Court and critics who believed his policies increased government intervention too much. Some historians argue that the New Deal may have prolonged the depression, while others believe it helped stabilize the economy.
Many agree that World War II played a significant role in ending the Great Depression. The war effort boosted the economy by increasing demand for goods and creating jobs. By 1942, the U.S. economy had largely recovered, although the war brought its own challenges, such as high taxes and reduced private sector production.
The Great Depression was a complex event with multiple causes, including the stock market crash, the Smoot-Hawley tariffs, and the gold standard. While the New Deal and World War II contributed to the recovery, no single factor can be credited with ending the depression. The lessons from this period continue to influence economic policies today.
Explore the cultural and economic aspects of the Roaring Twenties. Create a presentation highlighting key elements such as jazz music, fashion trends, and economic growth. Discuss how these factors contributed to the prosperity of the era and set the stage for the Great Depression.
Participate in a stock market simulation to understand the dynamics of buying and selling stocks. Experience the excitement and risks involved, and discuss how speculative investments contributed to the stock market crash of 1929. Reflect on the emotions and decisions of investors during that time.
Engage in a debate about the Federal Reserve’s actions during the 1920s and 1930s. Research and present arguments for and against the Fed’s policies, focusing on how they may have influenced the Great Depression. Consider the impact of monetary policy on the economy.
Work in groups to analyze different New Deal programs. Create a report on the objectives, successes, and criticisms of each program. Discuss how these initiatives aimed to address the economic challenges of the Great Depression and their long-term effects on American society.
Investigate how World War II contributed to the end of the Great Depression. Examine the economic changes brought about by the war, such as increased production and employment. Present your findings on how the war effort helped revive the U.S. economy and the challenges it introduced.
The Roaring Twenties brought about an era of bootleggers, flappers, swinging jazz, and economic prosperity. However, what followed was a dramatic and crushing fall. At the start of 1928, the economy in the United States was thriving, with progress on every horizon. Wall Street experienced a minor stock market crash in the spring, but things quickly balanced out, and people were happily ignoring any further signs of trouble.
By the fall, however, the market seemed to have peaked and began its downhill journey. With many Americans increasingly investing in the stock market, more people started to pay attention to the falling and volatile prices. Stocks were being sold at a faster pace, and October brought about Black Thursday on the 24th, the day the market crashed by 11%. Americans frantically hoped to sell what they had while they still could. Over the following days, the market continued to plummet, and panic rose.
Monday, October 28th, saw a 12% drop, and the next day, Black Tuesday, mirrored the previous Thursday. Americans were losing money by the millions, and trust in Wall Street was nearly nonexistent. Corporate and private wealth was affected by the ongoing crisis, which sent the American economy off the rails.
Many economists and historians look beyond the chaos of Wall Street itself and point to the actions of the Federal Reserve before the actual crash. The Federal Reserve, less than two decades old, had cut required reserves to only 3% and permitted massive monetary expansion during the Roaring Twenties. Experts argue that these actions caused inflation and the eventual crash of the stock market. The Fed reacted by cutting the money supply, which contributed to the collapse of banks across the country.
When the winter of 1930 triggered a new wave of hysteria and startling bank runs, hundreds of American banks proved unable to pay out and collapsed. The U.S. government was hesitant to react, as President Herbert Hoover believed in minimal government intervention and felt that the situation could resolve itself. This stance would hold until the following year, but Congress had other plans. On June 17th, the Smoot-Hawley Tariff Act was passed with the goal of protecting the U.S. economy by imposing high duties on over 800 foreign products. This decision would prove to be one of the most catastrophic attempts to stunt the depression, as it only accelerated it.
Dozens of countries affected by America’s economic collapse retaliated by slashing foreign imports and exports in the United States. As the depression worsened, Hoover finally chose to react, implementing increased taxes and raising federal spending by nearly 50%. This included the creation of the Reconstruction Finance Corporation, meant to provide loans to struggling banks. Hoover hoped to give the economy a kickstart and maintain price stability, which would, in turn, keep wages from dropping. However, this meant little to the approximately 15 million unemployed Americans and the thousands of closed banks across the country. People were growing hungry, homeless, and frustrated with their government’s failures.
When the next presidential election rolled around, a new face was elected to address America’s ballooning problems. In 1933, Franklin Delano Roosevelt won the presidential election in a landslide. Roosevelt, often referred to as FDR, ran his campaign on promises to provide aid for the impoverished American people and find new solutions for the nation to recover from the Great Depression. His inaugural address became widely remembered for his famous quote, “The only thing we have to fear is fear itself.” This attitude would guide him throughout his efforts to recover the economy and restore public trust.
FDR’s calm demeanor served a much-needed purpose during such a time of panic, and he utilized this through his live radio talks, known as his Fireside Chats. His goal was to keep the American public informed about everything he and Congress were doing and how they planned to act. A significant focus was on Roosevelt’s New Deal, a series of domestic policies and programs through which the president promised to take action, admitting failure when necessary and trying again. This reassured the American people that something would be done until the problem was resolved.
However, this required a drastic increase in government intervention, which some still view as problematic. Nevertheless, FDR opted to take action during the initial period known as the “first hundred days.” Congress quickly passed new laws and programs, including the Federal Emergency Relief Act, the Agricultural Adjustment Act, the Securities and Exchange Commission, the Civilian Conservation Corps, and the National Recovery Act (often abbreviated as the NRA). These actions aimed to boost the economy by supporting programs for the poor, providing government subsidies to farmers, regulating the stock market, and creating jobs for young workers.
While these moves seemed promising, they were just the beginning of FDR’s ambitious plans. Later efforts in the second wave of the New Deal included the Wagner Labor Relations Act, the Fair Labor Standards Act, the Works Progress Administration, and the Social Security Act. These acts focused on getting the workforce back to work and protecting the employed. The Roosevelt administration aimed to improve the economy while also aiding the American people.
However, the New Deal faced opposition from the Supreme Court. By 1937, FDR was frustrated with the resistance to his ideas and sought to address this by attempting to pack the Supreme Court. This move turned much of the public against him, and Congress was unable to implement it. Many economic historians doubt that Roosevelt would have resolved the depression even if the opposition to his ideas had been dealt with. Some argue that FDR did no better than Hoover; he simply made the same changes on a larger scale.
One significant difference was FDR’s decision to remove the United States from the gold standard, which had been impacting the economic downturn by slowing export demands. However, a study by economists at the University of California found that Roosevelt’s New Deal may have actually lengthened the Great Depression by nearly a decade. Many continue to debate whether FDR and the New Deal ended the country’s economic woes, and opinions vary widely.
Ultimately, one thing that many agree on is that World War II provided the final boost America needed to recover. If GDP and lowered unemployment are the metrics, it is asserted that the Great Depression came to a complete end by 1942. However, unemployment is tricky to judge, as 16 million Americans were called upon to fight in the global conflict. While international trade and certain demands increased during the war, private sector production dropped by around 50%, taxes spiked, and the general quality of life declined.
It wasn’t until after World War II concluded that a true light at the end of the tunnel could be seen. This leads many to credit the war for the resolution of the economic crisis. Even today, we cannot pinpoint one specific act or event that ended America’s greatest economic collapse, nor can we definitively state what caused it. The stock market crash, the Smoot-Hawley tariffs, and the gold standard can all be attributed to the economic downturn, but it is not possible to blame just one factor. Doing so would be overly simplistic, much like claiming that World War II resolved the crisis. The reality is far more complex.
Great Depression – A severe worldwide economic downturn that took place during the 1930s, beginning in the United States after the stock market crash of 1929. – The Great Depression led to widespread unemployment and poverty, affecting millions of families across the globe.
Stock Market – A marketplace where shares of publicly held companies are issued, bought, and sold. – The stock market crash of 1929 is often cited as a major factor that triggered the Great Depression.
Federal Reserve – The central banking system of the United States, responsible for implementing monetary policy and regulating banks. – During the Great Depression, the Federal Reserve was criticized for not doing enough to prevent bank failures.
Economy – The system of production, distribution, and consumption of goods and services within a society or geographic area. – The global economy was severely impacted during the Great Depression, leading to a decline in international trade.
Tariffs – Taxes imposed on imported goods and services, often used to protect domestic industries from foreign competition. – High tariffs during the early 1930s contributed to the worsening of the Great Depression by reducing international trade.
New Deal – A series of programs and policies implemented by President Franklin D. Roosevelt in response to the Great Depression, aimed at economic recovery and social reform. – The New Deal included initiatives such as Social Security and unemployment insurance to provide relief to struggling Americans.
Relief – Immediate assistance provided to alleviate suffering during economic hardships, often in the form of financial aid or public works projects. – Relief programs during the Great Depression helped provide jobs and support to those in need.
Jobs – Positions of employment where individuals work in exchange for wages or salary. – The creation of jobs through public works projects was a key component of the New Deal’s strategy to combat the Great Depression.
Inflation – The rate at which the general level of prices for goods and services rises, eroding purchasing power. – During the Great Depression, deflation was more of a concern than inflation, as prices fell and economic activity slowed.
Recovery – The process of economic improvement following a recession or depression, characterized by increased production and employment. – The recovery from the Great Depression was gradual, aided by New Deal policies and the onset of World War II, which boosted industrial production.
