World War I, the Great Depression, and the New Deal
Between 1914 and 1939, the United States went through a world war, a decade of giddy prosperity, and the worst economic collapse in its history. Each one changed what Americans expected their government to do, and by the end the federal government had taken on responsibilities that would have been unthinkable to a citizen of 1913.
That shift, from a limited federal role to an active one, is the thread tying this period together, and it is what most questions about the period circle around.
World War I (1914–1918) drew the United States onto the world stage. The 1920s boom ended with the stock market crash of October 1929, beginning the Great Depression, in which unemployment reached roughly 25 percent. President Franklin D. Roosevelt’s New Deal responded with programs for relief, recovery, and reform that permanently expanded the federal government’s role.
World War I and why the United States entered
The war began in Europe in 1914 after the assassination of Archduke Franz Ferdinand set off a chain of alliance commitments. The deeper causes are usually summarized as militarism, alliances, imperialism, and nationalism.
The United States stayed neutral for nearly three years. Two things changed that. Germany’s use of unrestricted submarine warfare threatened American shipping and killed American civilians, most famously with the sinking of the Lusitania in 1915. Then in 1917 the Zimmermann Telegram, a German proposal that Mexico join the war against the United States, became public. Congress declared war in April 1917.
Afterward, President Woodrow Wilson pushed his Fourteen Points and a League of Nations to prevent future wars. The Treaty of Versailles in 1919 created the League, but the U.S. Senate refused to ratify the treaty, and the United States never joined. That rejection is worth remembering because it shows the pull of isolationism even after a global war.
The 1920s: prosperity built on credit
The postwar decade brought automobiles, radio, electricity in homes, and a consumer culture financed increasingly by installment buying. Stock prices climbed, and many investors bought “on margin,” borrowing most of the purchase price.
Beneath the boom were weaknesses: farm prices stayed depressed, wealth concentrated at the top, and banks had little protection if depositors panicked. A market resting on borrowed money is stable only while prices rise.
The crash and the Depression
In October 1929 the stock market collapsed, with October 29 remembered as Black Tuesday. The crash did not by itself cause the Depression, but it triggered a spiral: banks failed, savings vanished, businesses cut production, workers lost jobs, and those workers stopped buying, which cost still more jobs.
By 1933, unemployment had reached about 25 percent. In farming regions, drought and years of aggressive plowing produced the Dust Bowl, and storms carried away topsoil across the southern plains, driving families west in search of work.
President Herbert Hoover believed recovery should come mainly through voluntary action and local relief, and resisted direct federal aid to individuals. As conditions worsened, that stance made him the target of public anger; shantytowns of the homeless were bitterly nicknamed “Hoovervilles.”
The New Deal
Roosevelt won the 1932 election and took office in March 1933 promising action. The New Deal is easiest to remember through its three aims:
| Goal | Meaning | Examples |
|---|---|---|
| Relief | Immediate help for suffering people | Civilian Conservation Corps, Works Progress Administration |
| Recovery | Restart the economy | Public works, Tennessee Valley Authority |
| Reform | Prevent a repeat | FDIC bank deposit insurance, Social Security Act |
Two 1935 laws mattered most for the long run. The Social Security Act created old-age pensions and unemployment insurance. The Wagner Act protected the right of workers to organize and bargain collectively, and union membership grew rapidly afterward.
The New Deal was contested at the time and remains so. Critics on the right argued it went too far in expanding federal power and spending; critics on the left argued it did too little for the poorest and left Black Americans, especially agricultural and domestic workers, outside key protections. When the Supreme Court struck down several programs, Roosevelt proposed in 1937 to add justices, a plan that failed and cost him political support. Historians still debate whether the New Deal ended the Depression or whether the enormous spending of World War II did. Most sources present that debate rather than settle it.
Watch: A Short Video Lesson
CrashCourse covers this ground clearly in a few minutes. It pairs well with the reading above:
Practice
A 1936 poster reads: “Work pays America! Prosperity through employment on WPA projects.”
1. This poster best illustrates which New Deal goal?
- Reform of the banking system
- Relief through government jobs
- Ending American involvement in Europe
- Reducing federal spending
2. The Social Security Act of 1935 is best described as
- a temporary relief measure
- a long-term reform creating pensions and unemployment insurance
- a military program
- a farm subsidy
3. Which best explains why the United States did not join the League of Nations?
- Wilson opposed it
- The Senate refused to ratify the Treaty of Versailles
- The League rejected the United States
- The Depression made it unaffordable
Answers: 1. B — the WPA put people to work, which is relief. 2. B — it built lasting institutions rather than temporary aid. 3. B — Wilson championed the League; the Senate blocked ratification.
Where this fits
The Depression ended in the shadow of another world war, and the government built during the New Deal became the government that mobilized for it. Continue with World War II and the postwar world, and look back at the industrial economy that set the stage in industrialization, the Gilded Age, and reform. Everything is on the Social Studies hub.
Recommended Prep Books
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