Weak governmental intervention and stubborn responses by overzealous investors led to the stock market crash in October of 1929. Non-existent money artificially inflated the prices of stocks traded on the market and caused firms to produce more than they could sell. When reality hit, it was too late to prevent the market from crashing. President Hoover reacted by stimulating construction and public works projects. Urging firms to keep wages steady and relatively high, he cut taxes and increased allocations for public spending. Hoover was initially praised for his approach and for his awareness of ancillary factors causing the recession including his blaming rampant stock speculation. His reputation fell when he passed the Smoot-Hawley Tariff. Moreover, his pro-development policies did not help circulate the surplus goods. Oversupply and under-demand were still core problems that needed to be addressed. Worker wages remained too low to stimulate consumer spending. In the absence of unemployment insurance or welfare assistance programs, many Americans went hungry even in the midst of surplus goods.

Hoover's successor, Franklin Delano Roosevelt, initiated big-government policies to make up for Hoover's more lax response to the crisis. When he took office in 1933 Roosevelt began delivering regular radio addresses to the public to stimulate confidence and hope. His set of big-government responses was collectively known as the New Deal. New Deal programs stimulated key industries. Not all of Roosevelt's New Deal programs succeeded and many failed. However, his interventionist politics changed the course of American History by redefining the role of the government in economic affairs, in the market, and in global policy.

Two of the predominant failures of the New Deal include the Agriculture Adjustment Administration (AAA) and the National Industrial Recovery Act (NIRA). Both were later declared unconstitutional, and they failed to achieve their stated objectives. The AAA was intended to raise the price of agricultural goods to help farmers...

However, to accomplish the goal the AAA actually paid farmers not to grow crops and manage their livestock for production. Similarly, the NIRA was instated to boost the prices of industrial goods but it too failed to address the root causes of the Depression. The NIRA did boost support for trade unions and set the stage for the federal minimum wage. The Public Works Association (PWA) also grew out of the NIRA and its grade-scale public projects helped stimulate the economy through job production and a reasonable, long-term outlet for industrial spending. Similarly, the Civilian Conservation Corps (CCC) offered work for both men and women to contribute to the restoration of American parks and recreational areas while earning a living. The Works Progress Administration (WPA) left a lasting legacy as did the Federal Emergency Relief Administration (FERA).
New Deal programs, policies, and ideologies changed American core values. What was once a nation characterized by libertarian ideals became a nation inextricably intertwined with the global market economy. The First and Second World Wars also brought to light the political interconnections and unavoidable conflicts between nations that would affect American foreign policy for the remainder of the century. New Deal programs created the Social Security Act and institutions like the Federal Deposit Insurance Corporation (FDIC) that acknowledged the need for some big government programs.