In 1929, the New York Stock Exchange crashed, leaving many companies' stocks worthless. Investors lost all of their money that they put in stocks. By the 1930s, banks and businesses were failing, and many Americans were out of work. A drought in the Great Plains turned the farmlands into a "Dust Bowl." Many farmers abandoned their farms and went to California to find work. This period became known as the Great Depression.

Franklin Delano Roosevelt was elected President in 1932 and promised to fight the Depression by using all the powers of the federal government. Roosevelt started a program called the New Deal to help Americans recover from the Depression. Some New Deal programs included controlling the way stocks were bought and sold, giving low interest loans to businesses, making sure banks were run properly, and passing the Social Security Act of 1935, which gave financial aid to retired and disabled Americans.

Under the New Deal, there were many different programs such as the Federal Emergency Relief Administration (FERA), which helped local relief organizations; the Works Progress Administration (WPA), which hired the unemployed to build schools, libraries, playgrounds, and hospitals; and the Public Works Association (PWA), which built dams, roads, and bridges. First Lady Eleanor Roosevelt traveled around the nation visiting soup kitchens and talking to the people. The president called her his "extra set of eyes and ears."