The Great Depression was the worst economic crisis in modern United States history, lasting through much of the 1930s. This cheat sheet helps students connect the stock market crash, bank failures, unemployment, and the Dust Bowl to the daily struggles Americans faced. It also explains how the New Deal changed the role of the federal government.
Students need these ideas to understand economic crisis, government response, and long-term reform.
Key Facts
- The stock market crash of 1929 did not cause the Great Depression by itself, but it helped trigger a wider collapse in confidence, spending, and investment.
- Overproduction means businesses or farms produce more goods than people can buy, which can lead to falling prices, layoffs, and lost income.
- Bank failures worsened the Depression because people lost savings, businesses lost credit, and fewer loans were available to support the economy.
- Unemployment reached about 25 percent in the United States in 1933, meaning roughly one in four workers could not find a job.
- Herbert Hoover believed voluntary cooperation and limited federal relief were better than direct national aid, but many Americans thought his response was too weak.
- Franklin D. Roosevelt’s New Deal focused on the three Rs: relief for people in need, recovery of the economy, and reform to prevent future crises.
- Major New Deal programs included the CCC for conservation jobs, WPA for public works jobs, FDIC for bank deposit protection, and Social Security for retirement and aid.
- The New Deal did not fully end the Great Depression, but it expanded federal responsibility for economic stability, jobs, banking, and social welfare.
Vocabulary
- Great Depression
- A severe worldwide economic crisis during the 1930s marked by high unemployment, falling production, bank failures, and widespread poverty.
- Stock Market Crash
- A sudden major drop in stock prices, especially the 1929 crash that helped weaken confidence in the economy.
- New Deal
- President Franklin D. Roosevelt’s set of programs and reforms designed to provide relief, recovery, and reform during the Great Depression.
- Bank Run
- A situation in which many people rush to withdraw their money from a bank because they fear it will fail.
- Dust Bowl
- A period of severe dust storms in the Great Plains during the 1930s caused by drought, wind, and poor farming practices.
- Social Security
- A New Deal program created in 1935 to provide retirement income and support for some unemployed, disabled, and vulnerable Americans.
Common Mistakes to Avoid
- Saying the stock market crash was the only cause of the Great Depression is wrong because the crisis also involved weak banks, overproduction, unequal wealth, debt, and falling demand.
- Confusing Hoover’s policies with Roosevelt’s New Deal is wrong because Hoover favored more limited federal action while Roosevelt created large national programs and reforms.
- Assuming every New Deal program had the same goal is wrong because some programs provided immediate relief, some encouraged recovery, and others created long-term reforms.
- Saying the New Deal ended the Great Depression completely is wrong because the economy improved but full recovery came with the massive production and employment of World War II.
- Ignoring the Dust Bowl’s role is wrong because environmental disaster forced many farm families to migrate and made the economic suffering of the 1930s worse.
Practice Questions
- 1 In 1933, unemployment was about 25 percent. If a town had 4,000 workers, about how many workers were unemployed?
- 2 A bank had 10,000 depositors, and 30 percent tried to withdraw their savings in one week. How many depositors joined the bank run?
- 3 Classify each New Deal program as relief, recovery, or reform: CCC, WPA, FDIC, and Social Security.
- 4 Explain how the Great Depression changed Americans’ expectations about the federal government’s responsibility during an economic crisis.