In 1929, the stock market crash spelled an end to the prosperity of the 1920s. The stock market crash marked the beginning of a period of economic hard times known as the Great Depression which lasted through the 1930s. During the 1920s, Many Americans had seen how some had gotten rich by investing in the stock market. They wanted to invest, too. Stock brokers made it easier to buy stock on credit by paying as little as 10% and owing the rest. This was known as buying on margin. When the stock market started going down, those who had bought stock on margin panicked and sold their stock crashing the market. The effects of the crash spread through the economy as more and more businesses and banks failed, factories closed, and many people became unemployed. By 1930, the nation was sinking into the worst economic depression in its history. Hoover did little to help the economy or those hurt by the depression, and many Americans began to blame him for the Great Depression and not helping those in need. The shanty towns of unemployed came to be known as Hoovervilles.
In 1932, voters chose Franklin Roosevelt as President. FDR promised a new deal for Americans. In the years ahead, he tried out many programs. Together, they were called the New Deal. The New Deal was a great departure from the policies of previous Presidents. The New Deal was based on the concept that the government had a responsibility for helping those in need and getting involved in the economy. The first problem Roosevelt tackled was the banks. He declared a bank holiday closing the banks and then allowed only those in sound financial shape to reopen. To reassure the public and let them know what the government was doing to help Roosevelt gave a series of radio broadcasts known as fireside chats. The New Deal had three many goals; relief for the unemployed, recovery to get businesses and factories going again, and reform to prevent another depression. The Works Progress administration (WPA) was a relief program that hired many Americans to do a wide range of jobs from building parks to putting on plays to painting murals. The National Recovery Administration (NRA) sought recovery through establishes business rules. The Federal Deposit Insurance Corporation (FDIC) was a prevention program created to stabilize banks by insuring the depositors' money.
Most Americans approved of the New Deal, evidenced by Roosevelt being re-elected several times. However, not everyone was pleased with the New Deal. Some Americans worried amount the mounting deficit. To pay for some of the programs the government spent more money than it took in; this is known as deficit spending. Some Americans worried about the free enterprise system and personal liberties. The government became larger and much more intrusive to businesses and to Americans personally. Supporters of the New Deal believed it had saved our democratic system of government, helped both people and business when they were in great need, and prevented future depression. The New Deal made things better, but did not end the Great Depression. Government spending for military supplies and drafting millions of men for World War II is credited with ending the Great Depression.
During the Great Depression, the Dust Bowl spread across the Great Plains. Years of poor land management and drought had caused the topsoil to turn to dust and be carried away by the wind. Thousands of Americans were forced off their farms. The depression brought hard times to minority groups like African Americans and Mexican Americans. Under the New Deal, however, Native Americans benefited from new government policies.