Economic Prosperity Preceded
Before the Great Depression, the Roaring Twenties signified a period of economic boom and social transformation. Technological advances led to mass production and consumerism, but also to overconfidence and market speculation.
The Stock Market Crash
The initial downturn began with the stock market crash on October 29, 1929, known as Black Tuesday. It wasn't the sole cause but signaled the beginning of economic decline, wiping out millions of investors.
Bank Failures Multiply
Following the crash, over 9,000 banks failed. Bank deposits were uninsured, so as banks collapsed, people lost their savings. The surviving banks became cautious, constricting economic growth further.
Global Economic Contagion
The Depression wasn't confined to the U.S. The gold standard, which linked currencies to gold, propagated the downturn internationally, turning it into a global economic crisis.
Dust Bowl Catastrophe
Severe drought and failure to apply dryland farming methods to prevent wind erosion caused the Dust Bowl, which devastated the Great Plains, displacing hundreds of thousands and worsening the economic situation.
New Deal Reforms
President Franklin D. Roosevelt's New Deal brought reforms to stabilize the economy, provide jobs, and introduce social welfare programs. These included the Social Security Act and the establishment of the FDIC to insure bank deposits.
Long-Term Economic Impact
The Great Depression reshaped the finance industry and government policy. It led to the Securities and Exchange Commission for stock market regulation and reinforced the need for a social safety net, influencing modern economic policy.