The Great Depression: impact (AQA GCSE History): Revision Notes

The Great Depression: impact

Introduction to the crisis

The Great Depression began following the Wall Street Crash of 1929 and created devastating effects across American society. This economic catastrophe led to massive unemployment increases and affected farmers, business owners, and ordinary workers in profound ways. The crisis transformed the lives of millions of Americans and reshaped the country's social and economic landscape.

Impact on business and the economy

Banking crisis and business failures

Banks had provided billions of dollars in loans during the prosperous 1920s, but when borrowers couldn't repay these debts, many banks collapsed. This created a cycle where banks became unwilling to provide new loans, making it extremely difficult for businesses to continue operating or expand their activities.

The scale of business failure was enormous. Industrial production experienced a dramatic decline of nearly 45% between 1929 and 1932. Business profits fell catastrophically from $10 billion in 1929 to just$1 billion in 1932, demonstrating the severity of the economic collapse.

During this period, demand for manufactured goods disappeared almost entirely, causing factories to shut down and businesses to fail at an unprecedented rate. By 1932, approximately 20,000 companies had ceased operations entirely.

The wealthy and property owners

Interestingly, the wealthiest Americans, while losing money during the Depression, were often better positioned to survive the crisis than others. Many possessed property and land that continued to provide some income, even if reduced. However, they too had to reduce their spending significantly and often had to dismiss staff members, which contributed to rising unemployment levels.

The unemployment crisis

Massive job losses across industries

Unemployment figures tell the story of the Depression's human cost. In 1929, approximately 3% of Americans were without work - a relatively normal rate. However, by 1932, this figure had skyrocketed to about 25% of the workforce, representing roughly 13 million people.

The impact varied dramatically by location and industry. In some industrial cities, such as Toledo, Ohio, unemployment reached a staggering 80%. Factories that had employed thousands of workers simply closed their doors, leaving entire communities without their primary source of income.

Ripple effects on communities

When factories closed, the businesses that depended on them also suffered. Restaurants, shops, and services near industrial areas lost customers as workers no longer had income to spend. This created a domino effect that spread unemployment throughout entire communities.

Agricultural devastation

Farm debt and foreclosure crisis

Farmers faced a particularly difficult situation during the Depression. During the 1920s boom period, many had borrowed money to purchase new machinery, which initially allowed them to produce more food than they could sell, leading to falling food prices.

When the Depression hit, struggling banks began demanding full repayment of loans from farmers. Many couldn't meet these demands and were forced to sell their farms. Between 1930 and 1934, over one million families lost their farms through foreclosure or forced sale.

Environmental disaster and migration

The agricultural crisis was made worse by environmental factors. In the Midwest and southern plains, severe drought combined with strong winds to blow away millions of acres of topsoil, creating what became known as the "Dust Bowl". This environmental disaster made farming impossible in many areas.

Faced with impossible conditions, many farmers abandoned their land and migrated to other areas seeking work. Most found employment as labourers on other people's farms, often for very low wages.

Social consequences and poverty

Homelessness and makeshift communities

The economic collapse left many Americans without homes. Those who lost everything often ended up in camps where they built temporary shelters from scrap materials. These settlements became known as "Hoovervilles", named after President Hoover, whom many blamed for not doing enough to address the crisis.

Widespread hunger and poverty

Charitable organisations established soup kitchens where homeless and unemployed people would queue in "breadlines" waiting for free food. The scale of poverty was unprecedented - by 1933, over 60% of Americans were officially categorised as poor by the government.

The Depression created a society where basic necessities became luxuries for millions of families, and the American dream of prosperity seemed impossible to achieve.

Timeline of key events and statistics

• 1929: Wall Street Crash occurs; unemployment at 3%
• 1929-1932: Industrial production falls by 45%
• 1930-1934: Over 1 million families lose their farms
• 1932:
  • Unemployment reaches 25% (13 million people)
  • 20,000 companies out of business
  • Business profits fall to $1 billion (from $10 billion in 1929)
  • 34 million people in families with no full-time worker
• 1933: Over 60% of Americans categorised as poor