Impact of World War 1 And the Great Depression

¶ … World War I upon the Great Depression on the federal role of American government

After the advent of the Great Depression and the presidency of Franklin Roosevelt, America shifted in its national emphasis from being an economically decentralized nation, with a capitalistic and 'hands off' attitude to the development of industry, to a more truly modern nation that took an active role in the lives and well being of its citizens. The American federal government also began to seek to exercise its moral influence upon the rest of the world. However, this shift from American isolationism towards those in need within America, as well as the needs of individuals abroad, did not come with some national soul-searching. The historian William E. Leuchtenburg writes in his text The Perils of Prosperity: 1914-32 that the economic advancement of the post World War I era, and America's less economically damaging late involvement in World War I created a sense of insulating national security for a time that ultimately proved damaging to the nation.

This economic isolationism from the needs of those who were impoverished abroad and at home was exemplified not simply in America's refusal to become a part of the League of Nations, but a general continuation of the Progressive Era's federal style of generally unobtrusive economic policies towards industry, in the hopes that capitalism would voluntarily counter its own excesses. These policies, although stridently capitalistic and enriching to the nation at the time, eventually gave rise to rampant speculation and a stock market bubble. Only Franklin D. Roosevelt's greater involvement in the American economy allowed for national healing to take place, with the use of greater federal involvement and management of the economy and of citizen's well being.