The Great Depression began in 1929 in the United States. While it is often connected with the stock market crash in October of that year, the causes were deeper. In the United States, agricultural overproduction had led to declining prices. Furthermore, wages for many workers were so low that they could not afford to buy the products they produced. Banks were often small independent businesses and were uninsured. And, the United States was on the gold standard, which reduced the flexibility of the government’s approach to economic policy.

The crash of the stock market led to a wave of bank failures. As the United States’ economy staggered, deflation set in. Businesses began to fail and unemployment climbed to nearly 25%. The government under Herbert Hoover enacted the Smoot-Hawley Tariff Act, intended to protect US businesses. This was criticized even at the time by many economists and had the effect of prompting other countries to raise their own tariffs. World trade, consequently, shut down.

Taking office in 1933, Franklin D. Roosevelt (FDR) instituted a series of emergency measures to try to shore up the economy. He began with a bank holiday and the Emergency Banking Act to stabilize banks. In a Fireside Chat, a radio broadcast to the American public, FDR explained his agenda. Other Acts soon followed; the program FDR implemented was called the New Deal. Among its most important provisions were the Glass-Steagall Act, support for farmers and other kinds of businesses, and work programs such as the CCC and the PWA.

The Second New Deal included further work programs such as the WPA, the National Labor Relations Act (or Wagner Act), and the Social Security Act. The work programs began to put people back to work; the construction projects employed mostly men, but there were also jobs for women, young people, artists, and writers. Art produced by the WPA’s Fine Arts Program adorns many of the public buildings constructed during the Depression era. Slowly, unemployment began to decrease. Roosevelt’s programs represented a huge expansion of government intervention into the business world of America as well as into the lives of Americans and were not without their critics.

Conservatives argued that these programs were too costly, while other activists such as Huey Long and Floyd Olsen asserted that the government had not gone far enough in its efforts to support its citizens. Women often suffered as their husbands were forced to leave home to look for work. However, the government also provided job training for women and  women were employed in government arts programs; an example is Dorothea Lange, who is famous for her pictures of migrant workers.

African Americans suffered disproportionately high rates of unemployment. In Chicago, as many as half of the African American working population was unemployed by 1932. The Federal Housing Administration also established the practice of ‘redlining’ — indicating high-risk areas of real estate on maps with a red marking. Soon, these were the only areas where African Americans were able to rent or buy property. In Canada, the Depression also caused a crash in imports and exports and an increase in unemployment.

As the Depression struck, Prime Minister Mackenzie King pursued a policy of inaction, believing that Canada could ride out the depression without government intervention. Richard Bedford Bennett (Prime Minister from 1930-1935) replaced King and also initially underestimated the impact of the Depression. Attempting to initiate a New Deal style program four years into his leadership, he was in turn replaced by MacKenzie King; fortunately, by 1937 the crisis was abating.

In Mexico, the impact of the Depression also decreased exports. Moreover, over 100,000 Mexicans and Mexican Americans were forced to leave the United States and return to Mexico. Strikes spread and wages fell. Import-substitution industrialization (ISI) has its roots in this era, as Latin American governments subsidized national manufacturing to support the creation of domestic manufactured goods to provide jobs for the people. In the 1930s, ISI was particularly successful in Brazil under Getúlio Vargas.