Skip over navigation

The Great Depression (1920–1940)

History SparkNotes

Key People & Terms

Summary of Events

The Politics of Conservatism: 1920–1928

People

Calvin Coolidge

A conservative from Massachusetts who became the thirtieth U.S. president upon the death of Warren G. Harding in 1923. In 1924, Coolidge was elected president in his own right, but in 1928 he declined an offer to run again. Like both his predecessor, Harding, and his successor, Herbert Hoover, Coolidge’s policy was to sweep away the remnants of progressive legislation and reward big business instead.

Warren G. Harding

The twenty-ninth U.S. president, whose election in 1920 brought about a decade of conservatism and benefits for big business. Harding’s isolationist stance also stifled former president Woodrow Wilson’s hopes to have the United States join the League of Nations. Under Harding, Congress passed the Esch-Cummins Transportation Act and the Fordney-McCumber Tariff, and the United States signed the Five-Power Naval Treaty, the Four-Power Treaty, and the Nine-Power Treaty for disarmament and the maintenance of the status quo in East Asia. Harding’s term was marred by scandal, most notably the 1923 Teapot Dome scandal. Harding died that same year, however, before he was fully implicated.

Herbert Hoover

A former engineer and millionaire who became the thirty-first U.S. president in 1928. Although Hoover had a reputation as a humanitarian for his relief efforts in World War I, he proved completely unprepared for the task of guiding the nation out of the Great Depression. After the stock market crash of 1929, Hoover encouraged Americans not to panic and promised there would be no recession. Hoover wasn't exactly a diehard proponent of hands-off, laissez-faire economics, and he did take some action in an attempt to halt the economy's freefall. But his policies generally failed, and millions of Americans eventually lost their jobs and homes. Many historians believe Hoover might have been able to curb the severity of the Great Depression had he made different decisions.

John Maynard Keynes

A British economist in the early twentieth century who believed that deficit spending during recessions and depressions could revive national economies. Keynes’s theories went untested until Franklin Delano Roosevelt applied them in the New Deal to bring the United States out of the Great Depression. The success of the New Deal converted Democrats to Keynesian-minded policy makers for the next several decades.

Franklin Delano Roosevelt

A distant cousin of former president Theodore Roosevelt who served as governor of New York before becoming the thirty-second U.S. president in 1933. Roosevelt’s main goal was to end the Great Depression. His New Deal programs and policies focused on immediate relief, long-term recovery, and reform in order to revive the economy. Despite the fact that he was usually wheelchair-bound (he was stricken with polio as a child), his optimism and charm did much to convince Americans that they had “nothing to fear but fear itself.” After the depression, Roosevelt successfully led the United States through World War II, was reelected to an unprecedented fourth term in office, and died while still in office on April 12, 1945.

Terms

Agricultural Adjustment Administration (AAA)

An administration created by Congress in 1933 to help destitute farmers. The AAA reset prices for agricultural commodities at their high, pre–World War I prices and paid farmers subsidies to cut production.

“Bonus Army”

A group of 20,000 disgruntled World War I veterans who marched on Washington, D.C., in 1932 to cash in on the army bonuses Congress promised to pay them by 1945. When Congress refused, the “Bonus Army” set up a large shantytown in the middle of the capital. Herbert Hoover eventually ordered federal troops to forcibly remove the veterans in what became known as the “Battle of Anacostia Flats. Hoover’s actions to squelch the “army” proved to be a fatal political error and convinced many Americans to vote for Franklin Delano Roosevelt in the election later that year.

Civilian Conservation Corps (CCC)

Body created by Congress in 1933 to put millions of young men to work on conservation projects throughout the United States. CCC workers reforested timberlands, fought forest fires, built public roads, and maintained public parks. The CCC was one of the most popular relief and recovery programs of the New Deal.

Crash of 1929

The massive crash of the U.S. stock market on “Black Tuesday, October 29, 1929. The crash occurred after American investors dumped more than 16 million shares in one day. Within two months, more than $60 billion had been lost. The crash was the primary catalyst for the Great Depression.

Dawes Plan

A plan created by Calvin Coolidge’s vice president, Charles Dawes, to save the European economy and enrich the United States by adjusting the payment of Germany’s war reparations from World War I. The Dawes Plan called for private American banks to loan Germany the money to pay off the billions of dollars in reparations owed to France and Britain. The English and French would then use the money to pay off war debts owed to the U.S. government. The scheme worked until the Crash of 1929 , when American banks no longer wanted to loan Germany money.

Eighteenth Amendment

A constitutional amendment, ratified in 1919, that banned the consumption, sale, and manufacture of alcohol. Congress supplemented the amendment with the Volstead Act, which created the Prohibition Bureau. Prohibition remained in effect for fourteen years, until it was repealed in 1933 by the ratification of the Twenty-First Amendment.

Emergency Banking Relief Act

A bill passed by Congress in March 1933 to give President Franklin Delano Roosevelt power to regulate the banking system and foreign exchange. Congress passed the act, which was the first piece of New Deal legislation, after Roosevelt declared a national banking holiday.

Emergency Quota Act

An act passed in 1921 to establish national yearly quotas for immigration. The act limited the total number of immigrants admitted annually from each country to 3 percent of the number of persons from that country living in the United States in 1910. When this act failed to stem the influx of southern and eastern Europeans, it was repealed and replaced by the even more restrictive Immigration Act of 1924 .

Fair Labor Standards Act

A bill passed in 1938 to establish a national minimum wage and a forty-hour workweek for workers employed by companies conducting interstate commerce. The Fair Labor Standards Act was one of the last pieces of Second New Deal legislation.

Federal Deposit Insurance Corporation (FDIC)

A corporation created as a result of the 1933 Glass-Steagall Banking Reform Act to protect individual savings accounts. The FDIC eliminated fly-by-night banks that had plagued the South and West for over a century and restored public confidence in the banking system. The FDIC was one of the main New Deal programs designed to reform the financial sector of the economy.

Federal Emergency Relief Administration (FERA)

An administration that Roosevelt and Congress created during the First Hundred Days to provide immediate economic relief. Unlike Herbert Hoover’s Reconstruction Finance Corporation, FERA distributed grants—not loans—to state governments and individuals.

Glass-Steagall Banking Reform Act

An act passed in 1933 to bar U.S. banks from underwriting stocks and bonds. The act also created the Federal Deposit Insurance Corporation  (FDIC). Unlike the Emergency Banking Relief Act, the Glass-Steagall Act was aimed at providing long-term reform.

Hatch Act

An act passed by the conservative Congress in 1939 to curb the Democrats’ ability to control elections with federal handouts. The law forbade most public servants from participating in political campaigns and prohibited Americans who received federal handouts from contributing to political campaigns. Moreover, the law blocked the use of federal funds in reelection campaigns.

Immigration Act of 1924

A 1924 bill that reduced the national immigration quota for each foreign country from 3 percent of the number of persons from that country living in the United States in 1910 to 2 percent of the number of persons from that country living in the United States in 1890. Because so few immigrants from southern and eastern Europe had come to the United States before 1900, the act effectively barred immigration from Italy, Poland, and the Balkans.

Indian Reorganization Act

An act passed in 1934 to permit Native American tribal councils to own land. The Indian Reorganization Act reversed the 1887 Dawes Severalty Act, and although it was only a partial success, it did alter federal government relations with America’s Native American tribes.

Nineteenth Amendment

A constitutional amendment ratified in 1920 to grant women the right to vote. Not surprisingly, the number of voters in the presidential election later that year nearly doubled compared to the numbers from the election of 1916.

Public Works Administration (PWA)

A government administration that Franklin Delano Roosevelt and Congress formed in 1933 to create new jobs, improve the nation’s infrastructure, and provide unemployment relief. Part of the First New Deal, the PWA was very similar to the Works Progress Administration of the Second New Deal.

Red Scare

The period immediately after the Russian Revolution of 1917 in which Americans feared that a similar Communist revolution might happen on U.S. soil. In 1919 and 1920, Americans became panicked and paranoid, convinced that communists were hiding and conspiring everywhere in the country. Hundreds of American Communist Party and Socialist Party members were arrested. Also, union members, who would strike and seek the right to collectively bargain with their employers, were seen as especially suspicious. As a result, unions began to shrink in number, because many labor organizers were arrested. Even those Americans who criticized the government were sometimes thrown in prison.

“Roosevelt Recession”

A 1937 recession caused by Franklin Delano Roosevelt’s decision to cut back on deficit spending before the Great Depression was really over. The Roosevelt Recession put millions of Americans back on the streets and contributed to the American people’s loss of confidence in the president and his New Deal policy.

Sacco-Vanzetti Trial

The 1921 trial of Italian immigrants Niccola Sacco and Bartolomeo Vanzetti, both self-proclaimed atheists and anarchists, who were accused of murder, found guilty, and executed, largely because of their ethnicity and Communist leanings. Although historians have concluded that the men probably did in fact commit the murder, their conviction had little to do with hard evidence and more to do with the anti-immigrant and antisocialist sentiments of the day.

Schechter v. United States

A 1935 case in which the conservative Supreme Court ruled that the National Recovery Act was unconstitutional on the grounds that the federal government had no business controlling intrastate commerce (or commerce that happens within a state’s boundaries). The ruling, along with the ruling in Butler v. United States the following year, prompted President Franklin Delano Roosevelt to devise his ill-fated court-packing scheme.

Scopes Monkey Trial

An infamous 1925 trial that dramatically played out the debate between Christian fundamentalism and Charles Darwin’s theories of evolution and natural selection. In the trial, a high school biology teacher, John T. Scopes, was accused of flouting a Tennessee ban on the teaching of evolution. Although Scopes technically lost the case, fundamentalists came away looking ridiculous, especially after confusing and contradictory answers given by former politician and “Bible expert” William Jennings Bryan.

Second Agricultural Adjustment Administration

A body created in 1938 that paid subsidies to farmers to cut farm acreage in order to curb overproduction. Congress created the Second Agricultural Adjustment Administration after the Supreme Court declared the First Administration unconstitutional.

Smoot-Hawley Tariff

A tariff passed by Congress and Herbert Hoover in 1930 that raised the tax on foreign goods to nearly 60 percent. The Smoot-Hawley Tariff crippled the American and international economies at a time when the world badly needed trade—not trade protection—to pull out of the widespread economic depression that was rapidly unfolding into the Great Depression.

Social Security Act

A 1935 act that established pensions for the elderly, handicapped, and unemployed. The Social Security Act completely changed the way Americans thought about work and proved to be one of the most significant pieces of legislation in the Second New Deal.

Soil Conservation and Domestic Allotment Act

A bill passed by Congress in 1936 (as part of the Second New Deal) that paid farmers subsidies to grow fewer crops in order to curb overproduction. The act also gave farmers extra subsidies to plant crops that would put nutrients back in the soil, in lieu of nutrient-depleting crops such as wheat.

Teapot Dome Scandal

A scandal during Warren G. Harding’s presidency in which the secretaries of the interior and the navy took large bribes to let a private company drill oil on federal lands near the town of Teapot Dome, Wyoming. Harding himself was implicated in the scheme but died before any charges could be filed. The scandal was the most famous of the many that surfaced during Harding’s term.

Tennessee Valley Authority (TVA)

A government agency specifically created to help the Tennessee River valley, which was one of the poorest regions of the United States during and prior to the Great Depression. The TVA worked to modernize the region and reduce unemployment by hiring local workers to construct dams and hydroelectric power plants. The TVA, though a success, was not without controversy: electric companies denounced the agency for producing cheap electricity and decreasing profits, and conservative Americans saw government-produced electricity as a step toward socialism. Still, the TVA improved the quality of life in the region so much that similar projects soon sprang up in the West and South. Within a decade, many major U.S. rivers had dams and hydroelectric power plants to provide electricity and jobs.

Twenty-First Amendment

A constitutional amendment ratified in 1933 to repeal the Eighteenth Amendment, which had initiated Prohibition.

Wagner Act

A 1935 act of Congress that legalized labor unions’ right to organize and bargain collectively. Also known as the National Labor Relations Act, the passage of the act was a momentous day for American laborers and initiated a series of strikes throughout the country. The act also helped the Congress of Industrial Organizations to form in 1935.

Works Progress Administration (WPA)

A government administration created in 1935 to hire over 10 million American men to construct public works projects such as roads, bridges, and public buildings. The WPA, one of the most significant programs created during the Second New Deal, helped provide immediate relief for many Americans during the Great Depression.

More Help

Previous Next

Follow Us