The Great Depression

In October 1929, the stock market crashed, wiping out 40 percent of the paper values of common stock. Businesses closed their doors, factories shut down and banks failed. By 1932, approximately one out of every four Americans was unemployed. The American people were questioning all the maxims on which they had based their lives - democracy, capitalism, individualism. The presidential campaign of 1932 was chiefly a debate over the causes and possible remedies of the Great Depression. Herbert Hoover, unlucky in entering The White House only eight months before the stock market crash, had struggled ineffectively to fix the problems. In 1933, the new president, Franklin D. Roosevelt, brought an air of confidence and optimism that quickly rallied the people to the banner of his program, known as the New Deal. The New Deal represented the result of a long-range trend toward the leaving behind of "laissez-faire" capitalism, going back to the regulation of the railroads in the 1880s and Progressivism during Teddy Roosevelt’s time. Although the responses of Franklin D. Roosevelt’s administration to the problems of the Great Depression were hastily drawn and contradictory, they gave the federal government a new role and brought an interest revival in government to Americans.

During Roosevelt’s First Hundred Days in office, he and Congress passed the bulk of the legislation of the First New Deal. The Brain Trust would try to appease New Deal critics (Document C). The first thing Roosevelt did was to declare a national bank holiday so that banks could reopen the following week on more stable footing. The Emergency Banking Relief Act also gave the president control over exchange rates and all banking transactions. In addition, the Glass-Steagall Banking Reform Act created the Federal Deposit Insurance Corporation (FDIC) to insure individual deposits with government money. The FDIC helped restore the public’s confidence in banks, as many people had lost their savings when banks failed after the stock market crash of 1929. The FDIC made sure that