Which of the following statements describe major causes of the great depression?

Assuming the Presidency at the depth of the Great Depression, Franklin D. Roosevelt helped the American people regain faith in themselves. He brought hope as he promised prompt, vigorous action, and asserted in his Inaugural Address, “the only thing we have to fear is fear itself.”

Born in 1882 at Hyde Park, New York–now a national historic site–he attended Harvard University and Columbia Law School. On St. Patrick’s Day, 1905, he married Eleanor Roosevelt.

Following the example of his fifth cousin, President Theodore Roosevelt, whom he greatly admired, Franklin D. Roosevelt entered public service through politics, but as a Democrat. He won election to the New York Senate in 1910. President Wilson appointed him Assistant Secretary of the Navy, and he was the Democratic nominee for Vice President in 1920.

In the summer of 1921, when he was 39, disaster hit-he was stricken with poliomyelitis. Demonstrating indomitable courage, he fought to regain the use of his legs, particularly through swimming. At the 1924 Democratic Convention he dramatically appeared on crutches to nominate Alfred E. Smith as “the Happy Warrior.” In 1928 Roosevelt became Governor of New York.

He was elected President in November 1932, to the first of four terms. By March there were 13,000,000 unemployed, and almost every bank was closed. In his first “hundred days,” he proposed, and Congress enacted, a sweeping program to bring recovery to business and agriculture, relief to the unemployed and to those in danger of losing farms and homes, and reform, especially through the establishment of the Tennessee Valley Authority.

By 1935 the Nation had achieved some measure of recovery, but businessmen and bankers were turning more and more against Roosevelt’s New Deal program. They feared his experiments, were appalled because he had taken the Nation off the gold standard and allowed deficits in the budget, and disliked the concessions to labor. Roosevelt responded with a new program of reform: Social Security, heavier taxes on the wealthy, new controls over banks and public utilities, and an enormous work relief program for the unemployed.

In 1936 he was re-elected by a top-heavy margin. Feeling he was armed with a popular mandate, he sought legislation to enlarge the Supreme Court, which had been invalidating key New Deal measures. Roosevelt lost the Supreme Court battle, but a revolution in constitutional law took place. Thereafter the Government could legally regulate the economy.

Roosevelt had pledged the United States to the “good neighbor” policy, transforming the Monroe Doctrine from a unilateral American manifesto into arrangements for mutual action against aggressors. He also sought through neutrality legislation to keep the United States out of the war in Europe, yet at the same time to strengthen nations threatened or attacked. When France fell and England came under siege in 1940, he began to send Great Britain all possible aid short of actual military involvement.

When the Japanese attacked Pearl Harbor on December 7, 1941, Roosevelt directed organization of the Nation’s manpower and resources for global war.

Feeling that the future peace of the world would depend upon relations between the United States and Russia, he devoted much thought to the planning of a United Nations, in which, he hoped, international difficulties could be settled.

As the war drew to a close, Roosevelt’s health deteriorated, and on April 12, 1945, while at Warm Springs, Georgia, he died of a cerebral hemorrhage.

The Presidential biographies on WhiteHouse.gov are from “The Presidents of the United States of America,” by Frank Freidel and Hugh Sidey. Copyright 2006 by the White House Historical Association.

For more information about President Roosevelt, please visit Franklin D. Roosevelt Library and Museum

Learn more about Franklin D. Roosevelt’s spouse, Anna Eleanor Roosevelt.

The Great Depression of the late 1920s and ’30s remains the longest and most severe economic downturn in modern history. Lasting almost 10 years (from late 1929 until about 1939) and affecting nearly every country in the world, it was marked by steep declines in industrial production and in prices (deflation), mass unemployment, banking panics, and sharp increases in rates of poverty and homelessness. In the United States, where the effects of the depression were generally worst, between 1929 and 1933 industrial production fell nearly 47 percent, gross domestic product (GDP) declined by 30 percent, and unemployment reached more than 20 percent. By comparison, during the Great Recession of 2007–09, the second largest economic downturn in U.S. history, GDP declined by 4.3 percent, and unemployment reached slightly less than 10 percent.

There is no consensus among economists and historians regarding the exact causes of the Great Depression. However, many scholars agree that at least the following four factors played a role.

The stock market crash of 1929. During the 1920s the U.S. stock market underwent a historic expansion. As stock prices rose to unprecedented levels, investing in the stock market came to be seen as an easy way to make money, and even people of ordinary means used much of their disposable income or even mortgaged their homes to buy stock. By the end of the decade hundreds of millions of shares were being carried on margin, meaning that their purchase price was financed with loans to be repaid with profits generated from ever-increasing share prices. Once prices began their inevitable decline in October 1929, millions of overextended shareholders fell into a panic and rushed to liquidate their holdings, exacerbating the decline and engendering further panic. Between September and November, stock prices fell 33 percent. The result was a profound psychological shock and a loss of confidence in the economy among both consumers and businesses. Accordingly, consumer spending, especially on durable goods, and business investment were drastically curtailed, leading to reduced industrial output and job losses, which further reduced spending and investment.

Banking panics and monetary contraction. Between 1930 and 1932 the United States experienced four extended banking panics, during which large numbers of bank customers, fearful of their bank’s solvency, simultaneously attempted to withdraw their deposits in cash. Ironically, the frequent effect of a banking panic is to bring about the very crisis that panicked customers aim to protect themselves against: even financially healthy banks can be ruined by a large panic. By 1933 one-fifth of the banks in existence in 1930 had failed, leading the new Franklin D. Roosevelt administration to declare a four-day “bank holiday” (later extended by three days), during which all of the country’s banks remained closed until they could prove their solvency to government inspectors. The natural consequence of widespread bank failures was to decrease consumer spending and business investment, because there were fewer banks to lend money. There was also less money to lend, partly because people were hoarding it in the form of cash. According to some scholars, that problem was exacerbated by the Federal Reserve, which raised interest rates (further depressing lending) and deliberately reduced the money supply in the belief that doing so was necessary to maintain the gold standard (see below), by which the U.S. and many other countries had tied the value of their currencies to a fixed amount of gold. The reduced money supply in turn reduced prices, which further discouraged lending and investment (because people feared that future wages and profits would not be sufficient to cover loan payments).

The gold standard. Whatever its effects on the money supply in the United States, the gold standard unquestionably played a role in the spread of the Great Depression from the United States to other countries. As the United States experienced declining output and deflation, it tended to run a trade surplus with other countries because Americans were buying fewer imported goods, while American exports were relatively cheap. Such imbalances gave rise to significant foreign gold outflows to the United States, which in turn threatened to devalue the currencies of the countries whose gold reserves had been depleted. Accordingly, foreign central banks attempted to counteract the trade imbalance by raising their interest rates, which had the effect of reducing output and prices and increasing unemployment in their countries. The resulting international economic decline, especially in Europe, was nearly as bad as that in the United States. 

Decreased international lending and tariffs. In the late 1920s, while the U.S. economy was still expanding, lending by U.S. banks to foreign countries fell, partly because of relatively high U.S. interest rates. The drop-off contributed to contractionary effects in some borrower countries, particularly Germany, Argentina, and Brazil, whose economies entered a downturn even before the beginning of the Great Depression in the United States. Meanwhile, American agricultural interests, suffering because of overproduction and increased competition from European and other agricultural producers, lobbied Congress for passage of new tariffs on agricultural imports. Congress eventually adopted broad legislation, the Smoot-Hawley Tariff Act (1930), that imposed steep tariffs (averaging 20 percent) on a wide range of agricultural and industrial products. The legislation naturally provoked retaliatory measures by several other countries, the cumulative effect of which was declining output in several countries and a reduction in global trade.

Just as there is no general agreement about the causes of the Great Depression, there is no consensus about the sources of recovery, though, again, a few factors played an obvious role. In general, countries that abandoned the gold standard or devalued their currencies or otherwise increased their money supply recovered first (Britain abandoned the gold standard in 1931, and the United States effectively devalued its currency in 1933). Fiscal expansion, in the form of New Deal jobs and social welfare programs and increased defense spending during the onset of World War II, presumably also played a role by increasing consumers’ income and aggregate demand, but the importance of this factor is a matter of debate among scholars.