Great Depression

In the 1920s, America underwent a period of seemingly unmatched prosperity, signaled by high levels of consumption and production. Much of that prosperity was founded on debit spending by businesses and consumers. Innovative technology had created sharp increases in industrial production and installment buying. The stock market crash of 1929 exposed the fragility of that economy, with consequences that stretched far beyond the borders of the United States. The American economy sneezed and the rest of the world caught a cold. Western European nations, struggling to recover from a disastrous war and relying heavily on American loans, had serious problems, now exacerbated by raised tariffs in the American market. Unemployment and social unrest followed, leaving countries like Italy and Germany susceptible to the appeal of fascism in the form of "strong men," demagogues who offered easy answers to complex economic problems.

In the United States, the shock of failure seemed to intensify in the early years. By 1932, 5,000 banks had failed; farmers' incomes, never that high even in the go-go 1920s, declined by 65 percent, while in the cities unemployment rates tripled. Ecological disasters--droughts in some sections of the country, which led to the Dust Bowl, and floods in others--contrived to produce a combined sense of paralysis and fear. By 1933, about 15 million Americans were unemployed. For the first time in its history, more people were emigrating from America than immigration to it.

In the 1932 presidential election, the Democratic nominee, Franklin Delano Roosevelt, campaigned on his pledge of "a new deal for the American people." Roosevelt won the election with a plurality of more than 7 million votes. His New Deal represented an aggressive attack on the depression, reanimating a nearly lifeless society. Swift legislation regulated the stock market and the banking system, improved the agricultural economy, and introduced a social security program....