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The GED® Social Studies Test: What You Need to Know About the Great Depression

When, Where, and What Was the Great Depression?

You may already know that the Great Depression was a time of severe economic downturn and hardship for many Americans. It was characterized by high rates of unemployment. But do you know much more than that? Here are a few basic points about the Great Depression:

  • The Great Depression began in October 1929 with the crash of the stock market. The 1920s were a period of rapid economic growth that was simply unsustainable. By the end of October 1929, people began selling stocks as growth slowed and prices began to drop.
  • By 1932, about 20 percent of the U.S. population was unemployed. FDR won the election that year as Americans were desperate for change and relief.
  • The depression was felt not only in the U.S. but in many industrialized countries, especially Europe. The economic depression of the 1930s gave rise to powerful dictators in Europe like Hitler and Mussolini, who promised to return their countries to greatness.

What Life Was Like During this Time

Daily life for the average American changed dramatically during the Great Depression.

  • Nearly one in four people were out of work or lost their main source of income. Periodic bank closures meant that people had to resort to a system of writing checks, IOU (I owe you) notes, or bartering for everyday necessities.
  • New Deal policies marked the greatest influence of Federal government in the daily lives of citizens in history and people had to adjust to that change if they wanted relief in the form of direct aid or government-sponsored jobs.
  • The Dust Bowl, a series of droughts and dust storms in the prairie farmlands of the West, was cause for rising unemployment of farmers and increasing prices of food across the country.
  • Leisure was characterized by the increasing use of the radio, the repeal of prohibition, and pride in local sports, all of which allowed people to escape the harsh realities of their economic situations.

Some Important People During This Era

  • Herbert Hoover— president from 1929 to 1933, sometimes blamed for the depression but more so for his lack of action in solving the problem quickly.
  • Franklin D. Roosevelt— president after Hoover and during the rest of the Depression. He implemented the New Deal, which initiated a series of government spending programs aimed at getting people back to work.
  • Adolf Hitler— rose to power rapidly during the 1930s as Germany was also in a severe depression. He promised to make Germany a great power once again.

A Brief Chronology of the Great Depression

  • 1929— Stock market crashes as people panic about dropping stock values after years of rapid growth.
  • 1930— In an effort to protect American business and make money, Hoover signs the Smoot-Hawley Tariff Act, which taxes hundreds of goods imported to the U.S. This sets off a trade war and pulls many other countries into depression.
  • 1932— Economy bottoms out at lowest stock levels and highest unemployment rates (over 20%).
  • 1933— FDR takes office and begins initiating New Deal programs to put people back to work.
  • 1938— The economy starts to grow again and the Depression is considered to be over.
  • 1941— U.S. declares war on Japan and Germany and unemployment drops below 10% as U.S. industries begin producing war supplies.

Some Important Documents During This Time

A few major legislative reforms were passed during the Great Depression, some of which are still in effect today and influence your daily life.

  • Unemployment Relief Act— set up the Civilian Conservation Corps (CCC), which put young men to work on environmental projects like planting trees, constructing trails, and building shelters in over 800 parks nationwide
  • Banking Act of 1933— government insured bank deposits (Federal Deposit Insurance Corporation) so that people feel more secure putting their money in the bank (In 1933, the FDIC insured up to $5,000 in deposits while today they insure $250,000.)
  • Securities Exchange Act— created the Securities Exchange Commission (SEC) to regulate the stock market
  • Social Security Act— created a federal and state welfare system that workers pay into and can receive benefits when retired, unemployed, injured, and more

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