What was the Great Depression?
Answer
The severe economic crisis of the 1930s
Explanation
The Great Depression was the worst economic crisis in American and world history, beginning in 1929 and lasting through the 1930s until the start of World War II. In the United States, real gross national product fell by nearly 30 percent between 1929 and 1933. Industrial production was cut almost in half. Unemployment, which had been around 3 percent in 1929, peaked at about 25 percent in 1933, meaning that one in four American workers had no job. By some estimates, another quarter of the workforce was underemployed or had taken steep wage cuts. About nine thousand banks failed between 1930 and 1933, wiping out the savings of millions of families.
The crisis began on Wall Street. After a long run of speculation and easy credit during the 1920s, stock prices collapsed in October 1929. Black Thursday on October 24 and Black Tuesday on October 29 wiped out billions of dollars in paper wealth. The damage spread quickly because so much of the boom had been financed with borrowed money. As stocks fell, lenders demanded payment, borrowers defaulted, and banks ran out of cash. Frightened depositors lined up to withdraw what they could, triggering bank runs that destroyed even healthy institutions.
The Federal Reserve made the situation worse by tightening rather than loosening credit. International trade collapsed after the United States raised tariffs in the 1930 Smoot-Hawley Tariff Act, and other countries retaliated. A severe drought in the Great Plains turned millions of acres into the Dust Bowl, driving farmers off their land and toward California.
President Herbert Hoover, who took office in March 1929, believed in voluntary action and limited federal relief, and his approach failed to stop the slide. Voters elected Franklin D. Roosevelt in 1932, who launched the New Deal in March 1933 with bank holidays, deposit insurance, public works programs such as the Civilian Conservation Corps and the Works Progress Administration, Social Security in 1935, and major regulation of finance and labor. Recovery was slow. Unemployment was still about 14 percent in 1940. Massive defense spending after Pearl Harbor in December 1941 finally restored full employment and ended the Depression in the United States.
Why this matters for your test
USCIS asks about the Great Depression because it produced the modern American social safety net, the regulatory state, and a permanent expansion of federal economic responsibility. Knowing this period helps applicants understand why the federal government plays a role in banking, labor, retirement, and unemployment insurance today.
Source: USCIS 128 Civics Questions (2025)
