AP U.S. History · Lesson 3

The Depression, the New Deal and World War II

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The stock market crash of October 1929 did not cause the Great Depression by itself. Deeper weaknesses made the slump severe: income was concentrated at the top, farmers had struggled since the early 1920s, many investors had bought stock with borrowed money (buying on margin), and thousands of banks with no deposit insurance failed, wiping out savings. The Hawley-Smoot Tariff (1930) raised duties, other nations retaliated, and world trade shrank.

President Herbert Hoover believed in voluntary cooperation and local relief. He created the Reconstruction Finance Corporation (1932) to lend to banks and railroads, but he opposed direct federal relief to individuals, and the army's eviction of the Bonus Army of protesting veterans from Washington in 1932 hurt him badly.

Franklin D. Roosevelt's New Deal aimed at relief, recovery and reform. Relief programs such as the Civilian Conservation Corps and later the Works Progress Administration hired millions of jobless people for public projects. The Agricultural Adjustment Act paid farmers to grow less, and the National Industrial Recovery Act set codes for industries. Reforms built lasting institutions: the FDIC insured bank deposits, the Securities and Exchange Commission policed the stock market, the Social Security Act (1935) created old-age pensions and unemployment insurance, and the Wagner Act (1935) protected workers' right to join unions and bargain collectively.

The New Deal drew fire from both sides. Huey Long and Father Charles Coughlin said it did too little for ordinary people, while business groups such as the American Liberty League said it threatened liberty. The Supreme Court struck down the National Industrial Recovery Act in 1935, and Roosevelt's 1937 plan to add justices failed. The New Deal did not end the Depression, and many programs paid women and Black workers less or left them out; Social Security at first excluded farm and domestic workers. Still, it built a New Deal coalition that kept Democrats in power for years.

In the mid-1930s Congress passed Neutrality Acts to keep the nation out of another European war. After war began in 1939, Roosevelt moved step by step toward aiding Britain: cash-and-carry arms sales, the destroyers-for-bases deal (1940) and the Lend-Lease Act (1941). Japan's attack on Pearl Harbor on December 7, 1941, brought the United States into the war.

War production put Americans back to work. Millions of women took industrial jobs, and another wave of Black Southerners moved north and west. After A. Philip Randolph threatened a march on Washington, Roosevelt barred discrimination in defense industries, and Black newspapers called for a Double V: victory over fascism abroad and racism at home. The Bracero Program (1942) brought Mexican workers to American farms. Executive Order 9066 (1942) led to the forced removal and incarceration of about 120,000 Japanese Americans, most of them U.S. citizens, and the Supreme Court upheld the removal in Korematsu v. United States (1944).

The Allies fought Germany first, invading North Africa, Italy and then France on D-Day (June 6, 1944), while American forces in the Pacific advanced island by island. Germany surrendered in May 1945. In August 1945 the United States dropped atomic bombs on Hiroshima and Nagasaki, and Japan surrendered.

New Deal measures by aim
AimWhat it meantExamples
ReliefImmediate help for the jobless and hungryCivilian Conservation Corps, Works Progress Administration
RecoveryReviving farm prices, business and industryAgricultural Adjustment Act, National Industrial Recovery Act
ReformChanges meant to prevent another collapse and protect workersFDIC, Securities and Exchange Commission, Social Security, Wagner Act

Trap A program that hires no one is not relief

Students often call every New Deal program relief. Ask what the program did. If it gave jobs or aid to people in need right away, it is relief. If it changed the rules of banking, the stock market or labor so a collapse would be less likely, it is reform, even when it was popular with the jobless.

Worked example Easy

Which New Deal agency insured bank deposits so that a bank failure would no longer wipe out ordinary savers?

  1. The SEC
  2. The CCC
  3. The FDICAnswer
  4. The NIRA

How to solve it

  1. The stem is about protecting savings when a bank fails.
  2. Deposit insurance is the job of the FDIC, a reform that still exists.

Why each choice is right or wrong

  • A. Incorrect. The Securities and Exchange Commission regulated the stock market; it did not insure bank deposits.
  • B. Incorrect. The Civilian Conservation Corps hired young men for conservation work, a relief program, not deposit insurance.
  • C. Correct. The Federal Deposit Insurance Corporation, created in 1933, insured deposits so that bank runs and lost savings became far less common.
  • D. Incorrect. The National Industrial Recovery Act set codes for industries; it did not insure deposits.

Explain Explain it

Task verbs: explain, compare

To compare two responses to a crisis, put them side by side on one question: who should act, and how? For the Depression, ask whether Washington gave help directly to individuals or worked through voluntary action, local government and loans to business.

Worked example Medium

How did Franklin Roosevelt's response to the Depression differ most from Herbert Hoover's?

  1. Roosevelt refused to lend any federal money to banks or railroads
  2. Roosevelt relied mainly on charities and local governments to handle relief
  3. Roosevelt cut federal spending so the budget balanced in every year
  4. Roosevelt used federal money to give jobs and relief directly to peopleAnswer

How to solve it

  1. Ask who acted and how in each case.
  2. Hoover worked through volunteers, local relief and loans to business; Roosevelt had Washington hire and aid individuals directly.

Why each choice is right or wrong

  • A. Incorrect. Roosevelt kept federal lending to business going and added emergency help for banks, so he did not refuse such loans.
  • B. Incorrect. Relying on charities and local relief was Hoover's approach, the opposite of Roosevelt's.
  • C. Incorrect. The New Deal ran deficits in most years, so the budget did not balance every year.
  • D. Correct. Programs such as the CCC and WPA put federal money directly into jobs for individuals, which Hoover had opposed.

Explain Your turn

Explain one way the New Deal lastingly expanded the federal government's role in Americans' lives, and give one limit or criticism of the New Deal.

Write it, then compare. Nothing you type here is saved or graded.

Compare with a model answer

A full answer does this

  • Gives a lasting New Deal measure and what it does
  • Gives an accurate limit or criticism of the New Deal

Model answer

The New Deal made the federal government a lasting safety net: the Social Security Act of 1935 created old-age pensions and unemployment insurance that still exist today. But the New Deal had limits. It did not end the Depression, since unemployment stayed high until war production began, and Social Security at first left out farm and domestic workers, which excluded many Black workers.

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