The Great Depression and New Deal

Grade 8 · Social Studies · Study Guide

The worst economic crisis in American history, what caused it, and how FDR's New Deal attempted to put America back to work.

On October 29, 1929 — a day known as Black Tuesday — the US stock market crashed catastrophically, wiping out billions of dollars in wealth and triggering the Great Depression, the worst economic crisis in American history. For over a decade, unemployment soared, banks failed, farms collapsed, and millions of Americans went hungry. It reshaped how Americans think about government's role in the economy.

The Depression had multiple causes. The stock market crash was the trigger, but underlying problems included overproduction in agriculture and industry, weak banks, income inequality (the rich had most of the money while ordinary workers didn't earn enough to buy what factories produced), and disastrous government policy. The Smoot-Hawley Tariff (1930) triggered retaliatory tariffs from other countries, collapsing international trade. When banks failed, they wiped out ordinary people's savings — there was no federal deposit insurance.

By 1933, unemployment had reached 25% — one in four American workers. In the Great Plains, a decade-long drought combined with poor farming practices turned topsoil into dust, creating the Dust Bowl. Families from Oklahoma and Texas — called 'Okies' — abandoned their farms and migrated west to California looking for any work.

Franklin D. Roosevelt (FDR) won the presidency in a landslide in 1932, promising 'a new deal for the American people.' His New Deal programs were unprecedented government intervention in the economy. The FDIC (Federal Deposit Insurance Corporation) insured bank deposits. The Social Security Act (1935) created retirement benefits for workers. The WPA (Works Progress Administration) employed millions to build roads, bridges, schools, and parks. The New Deal didn't fully end the Depression — it took World War II to do that — but it stabilized the economy, restored confidence, and permanently expanded the federal government's role in protecting ordinary Americans.

Key terms

Black Tuesday: October 29, 1929 — the stock market crash that triggered the Great Depression
Great Depression: The worst economic crisis in US history (1929-1939), with 25% unemployment and widespread poverty
Dust Bowl: Severe drought and soil erosion in the Great Plains during the 1930s that devastated farms and displaced hundreds of thousands
New Deal: FDR's series of programs to provide relief, recovery, and reform during the Great Depression
Social Security Act (1935): New Deal law creating retirement benefits for workers, unemployment insurance, and aid for people with disabilities

Flashcards

Black Tuesday (Oct 29, 1929): Stock market crash that triggered the Great Depression
Great Depression (1929-1939): Worst US economic crisis — 25% unemployment, bank failures, widespread poverty
Dust Bowl: 1930s drought and soil erosion disaster in Great Plains — displaced hundreds of thousands of farm families
New Deal: FDR's unprecedented government programs providing relief, recovery, and reform during the Depression
Social Security Act (1935): Created retirement benefits, unemployment insurance, and disability assistance — still in effect today
FDIC: Federal Deposit Insurance Corporation — New Deal agency that insures bank deposits so bank failures don't wipe out savings

Practice questions

The stock market crash on Black Tuesday (1929) was followed by the:
1. Civil Rights Movement
2. Great Depression
3. Progressive Era
4. New Frontier
Show answer
Answer: Great Depression
The 1929 stock market crash wiped out billions in wealth and triggered bank failures, which froze credit, which caused businesses to collapse and workers to be laid off in a downward spiral that lasted a decade.
Unemployment during the Great Depression peaked at approximately 25% in 1933.
Show answer
Answer: True
Unemployment peaked at about 24.9% in 1933 — one in four workers had no job. Combined with bank failures wiping out savings, millions of families had no income and no safety net.
The ___ Bowl was a devastating period of drought and soil erosion in the Great Plains during the 1930s.
Show answer
Answer: Dust
A decade of drought combined with over-plowing that removed protective native grasses turned Great Plains topsoil to dust. Massive storms called 'black blizzards' buried farms and towns. About 2.5 million people fled the region.
FDR's New Deal programs were designed to:
1. Privatize the banking system
2. Provide relief, recovery, and reform during the Depression
3. Prepare the US for entering World War II
4. Reduce the size of the federal government
Show answer
Answer: Provide relief, recovery, and reform during the Depression
FDR described his New Deal with three Rs: Relief for the unemployed and poor, Recovery of the economy to normal levels, and Reform of the financial system to prevent another Depression.
The Social Security Act of 1935 created retirement benefits for American workers.
Show answer
Answer: True
The Social Security Act (August 14, 1935) is one of the most important laws in American history. It created the old-age pension system that still exists today, along with unemployment insurance and aid to dependent children.

Fun facts

During the Dust Bowl, some storms were so severe that darkness fell in the middle of the day. A single storm on 'Black Sunday' (April 14, 1935) moved 300,000 tons of topsoil across the Great Plains.
FDR's New Deal created so many agencies they became known by their initials — CCC, WPA, FDIC, SEC, TVA, PWA — Americans called them 'alphabet soup.'

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