Great Depression, 1929-1933

Episode #4 of the course “Most Important Historical Events of the 20th Century”

The Great Depression was an economic downturn that began with the 1929 stock market crash. It is still considered the deepest and longest-lasting economic crisis in any Western industrialized country. This crash caused stock values to decrease drastically, and many companies had to close their doors as a result of the lost value. When these businesses closed, millions of people lost their jobs. People were also concerned about the stability of the banks, so they quickly withdrew money from their accounts. People were unable to make bank payments on outstanding loans. The combination of these factors (among others) caused widespread bank failures; there were 25,000 banks in the United States at the time, and by 1933, 11,000 of them had failed. This downturn also caused people to spend less and save more—but not at the bank—which dramatically decreased the demand for products and services. By then, roughly 13 to 15 million workers were unemployed.

The Great Depression was more than just an economic slump in the United States, though. It affected all of North America, Europe, and other industrialized countries around the world. The trade and economic relationships that the United States had with other allied countries from World War I likely significantly contributed to this worldwide depression. The United States served as a source of funds for many European countries, so when it was unable to keep up its own finances, that affected other nations as well.

Although some political reforms, particularly Franklin Roosevelt’s New Deal campaign, helped curb the effects of the Great Depression, it really did not end until the beginning of World War II. World War II increased demand for military supplies, which created jobs. That also meant that people had more money to spend, so they could spend their money on consumer items again.

The Great Depression made the United States take a hard look at their welfare and unemployment programs. The U.S. was the only industrialized country at the time that did not have some form of unemployment insurance or social security. In 1935, that changed with the passage of the Social Security Act.

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