Possibly the greatest crisis faced by the United States since the Civil War, the Great Depression completely changed the nature of American government. It is easy to trace the development of the national government as a guarantor of public welfare and defender of not only our lives but our well-being. Though the Great Depression allowed the government to take a more active role in what were once private matters, I do not feel that it helped to create a "modern welfare state". Many of the problems that led to the Great Depression and the actions of FDR pre-dated the stock market crash that sank the US into economic crisis. In the long-term, a mixture of international and United States policy mistakes created an atmosphere of instability that exacerbated a pre-determined depression. .
One can say it all began with World War I, but even pre-1914 cyclical economic conditions set the world stage for a slight depression in 1920-21. This made it even more difficult for the European countries to recover from the devastation they encountered in the Great War. Europe was already falling behind the United States, and the war greatly accelerated this trend. During WWI the US and the USSR became self-sufficient, and other markets were closed to Europe because the customers had shifted to more reliable suppliers. This made world growth in the 1920s slower than before the war, decreasing European demand for imports that in turn decreased demand for European exports. The United States also had an edge in emerging industries. The American economy was more dynamic, embracing the fast growing industries such as automobile production. Europeans were heavily committed to older, declining industries, and it was difficult for them to shift to new ones. .
Political factors caused by the war also hurt Europe's ability to recover. The redrawing of political boundaries created new states with little regard to economic viability.