The Great Depression is a common term for the social and economic situation in the United States (US) after a dramatic financial disaster in 1929. Brought on by a variety of factors, recovery from the Depression took nearly a decade in the United States, and had devastating effects on the worldwide economy. The United States’ President Franklin Delano Roosevelt is widely credited for pursuing policies that allowed both the economy and the country to recover by the end of the 1930s.
What caused the Great Depression is a matter of considerable debate among historians and economists. Due to failing markets and the convergence of several unfavorable economic factors, the US stock market fell dramatically in late October of 1929 and continued its overall plunge until 1932. According to financial experts, the market did not return to pre-depression levels until the mid 1950s.
Although the Wall Street Crash did not cause the Great Depression, the enormity of the event brought to light the severe threat to the American economic system. Moreover, the massive costs of the recently concluded World War I left the global economy unable to quickly respond to the crisis. Unemployment skyrocketed as businesses that had survived on stocks were forced to shrink or close altogether. Uncounted numbers of individuals lost their invested life savings and jobs, forcing many families from a comfortable existence to poverty in a matter of months, weeks, or even days.
Despite his initial popularity, US President Herbert Hoover was held to blame for failing to prevent or prepare for the Great Depression, leading to the election of Franklin Roosevelt in 1932. Although some historians point out that Hoover could not possibly have prevented the disaster, the election of Roosevelt is seen by many as a turning point in the Depression. Roosevelt responded quickly with new policies meant to increase employment and bail out the economy. These policies quickly gained popularity, becoming known as the New Deal.
The New Deal included temporary relief programs for the unemployed, and focused on rewriting federal law to improve the way banks and corporations were run. One of the major programs was the Works Progress Administration (WPA), which created millions of government jobs dedicated to public projects such as road and bridge building. The WPA also created thousands of jobs for artists through government programs geared toward supporting art, such as the Federal Theater Project. The New Deal also repealed Prohibition, the constitutional amendment banning alcohol in the United States, to great acclaim.
Although the economy did not begin its full recovery until World War Two created the need for vast wartime industries, the election of President Roosevelt and his tremendous response to the crisis are often credited as changing the mood of the country and restoring hope to the millions of unemployed and suddenly destitute citizens. Some have compared the 2008 election of US President Barack Obama to that of Roosevelt, citing that both ran on a message of unparalleled change during a time of severe economic downturn. While most economists believe that the recession of 2008 will not create a crisis as severe as the Great Depression, the ability of President Obama’s government to turn the falling economic tide will doubtless face constant comparison to the inspirational and historic work of President Roosevelt.