Understanding the Great Depression: Integrating Economic and Religious Perspectives

The Great Depression represents a complex historical problem lacking consensus on its causes. While Bernstein and Samuelson noted that perspectives have shifted from viewing it as capitalism’s fundamental weakness to include policy problems, the thesis for this argument motivated research to suggest an overlooked dimension: a religious depression that predates and contextualizes the economic crisis.¹

Conventional Economic Explanations

Traditional explanations of the Great Depression fall into several categories. Short-run theories attribute the crisis to the 1929 stock market crash and banking collapse, yet Bernstein highlights that business indicators had already begun declining before the crash.² Policy failure arguments blame government mismanagement, but they fail to explain why previously effective policies proved inadequate. Long-run structural theories, such as income inequality and market concentration, provide insight but contain significant weaknesses. While these explanations offer valuable perspectives, they may overlook a titration of the charitable and religious landscape of the 1920s as a precursor to the economic collapse.

The Religious Depression as a Precursor

Robert T. Handy’s study, The American Religious Depression, 1925–1935, identifies this period as one of profound religious decline, characterized by a loss of Protestant church influence and internal denominational struggles.³ The article’s research identifies a religious depression (1925–1935) that predates the economic downturn, marked by declining Protestant missionary activity, church attendance, and religious giving. Notably, this decline occurred despite economic prosperity in the 1920s. For example, per capita benevolence gifts fell from $5.57 in 1921 to $3.43 in 1929, while missionary volunteers plummeted from 2,700 in 1920 to just 252 in 1928.⁴ These statistics may have indicated a waning of religious enthusiasm and institutional stability before the financial collapse. Hudson, cited by Handy, argues that this religious downturn not only preceded but potentially exacerbated the Great Depression by weakening faith-based social networks and diminishing the role of churches in community welfare.⁵ Furthermore, religious institutions facing financial constraints and diminishing authority were increasingly unable to provide moral and material support during the economic crisis.

This religious depression was not merely a reflection of economic hardship; rather, it was exacerbated by theological and ideological struggles within Protestantism. The Fundamentalist-Modernist Controversy (1910–1930) fractured American Protestantism, weakening its unity and undermining missionary sending.⁶ From The Fundamentals (1910–1915) to the infamous Scopes Trial (1925), disputes over biblical literalism, evolution, and the social gospel divided denominations.⁷ H. Richard Niebuhr (1927) observed a “psychology of defeat” permeating religious institutions, signaling a retreat from previous confidence in religious and social reform.⁸

Historically, American Protestantism had functioned as a quasi-national religion, deeply intertwined with the country’s identity and institutions. Differently, by the 1930s, as Will Herberg argues in Protestant-Catholic-Jew, this period marked the end of Protestantism as America’s singular religious identity, shifting instead toward a pluralistic religious landscape alongside Catholicism and Judaism, a transformation that many Protestant insiders resisted, fearing the dilution of their influence and the erosion of their intrinsic theological and cultural authority.⁹ Yet, paradoxically, this crisis also freed many Protestants to reengage with their theological heritage, leading to revival movements, as Billy Sunday preached in 1926.¹⁰

Economic Implications of Religious Decline

The economic implications of this religious depression align with Steindl’s analysis of the interaction between cyclical forces and long-run economic tendencies.¹¹ As church financial infrastructure and social services deteriorated, Protestant institutions that were once key providers of charity, education, and social support became less capable of responding to the economic crisis.¹² Declining church attendance and missionary sending weakened community cohesion and social resilience, intensifying the effects of financial collapse.¹³

This perspective reinforces Bernstein’s call to examine both immediate economic triggers and long-term structural developments.¹⁴ The loss of religious engagement and institutional strength was not simply a cultural shift but an economic vulnerability, a context to help interpret the broader crisis of the 1930s. Because of the stated disregarded influence of property holding by Fred E. Foldvary in his article “The Austrian Theory of the Business Cycle” an open question worthy of study asks how did land holding and building development allow for the sequestration of the church-and-charity economy out of the general economy at this time.¹⁵

Historiographical Reinterpretation

Standard historiography, including Bernstein’s analysis, often neglects religious dimensions by treating faith traditions as cultural expressions rather than independent systems of knowledge. This lack of disambiguation trivializes faith experience and over smoothes religious motivations in historical accounts. A secularization bias could be examined in future research to bolster the twenty-first historiographical shift toward the sacred. A question that may be asked, but not yet answered, seeks an accounting, quantitatively and qualitatively, for the impact of religious institutions on economic and political developments. To inform this possible line of scholarship, Jon Butler, in his seminal work Awash in a Sea of Faith: Christianizing the American People, examines the complexities of religious transformations in America.¹⁶ Alison Collis Greene poignantly titled her work, No Depression in Heaven. ¹⁷ Additionally, David D. Hall, in his edited volume Lived Religion in America: Toward a History of Practice, explores the concept of lived religion, distinguishing between ‘lived religion’ and ‘popular religion.’¹⁸

By reframing the religious depression (1925–1935) as both a precursor to and contextual factor of the Great Depression, this approach bridges historiographical gaps. Future scholarship may be well served if it moves beyond strictly economic frameworks to examine how religious and spiritual dimensions shape economic and societal stability.

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1. 1.  Michael A. Bernstein, “The Great Depression as Historical Problem,” OAH Magazine of History 16, no. 1 (2001): 5-6; Robert J. Samuelson, “Revisiting the Great Depression,” The Wilson Quarterly 36, no. 1 (2012): 43. ↩︎
2. 2.  Bernstein, “The Great Depression as Historical Problem,” 4. ↩︎
3. 3.  Robert T. Handy, “The American Religious Depression, 1925-1935,” Church History 29, no. 1 (January 1, 1960): 3–16. ↩︎
4. 4. Charles Stelzle, “Decline of American Protestantism,” Current History 33, no. 1 (October 1, 1930): 23–28.
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5. 5.  Handy, “The American Religious Depression, 1925-1935,” 6; Winthrop Still Hudson, The Great Tradition of the American Churches (New York: Harper and Bros., 1953), 153. ↩︎
6. 6. Jong Cheol Shin, “A Study of the Fundamentalist-Modernist Controversy in the 1920s Within the Presbyterian Church in the United States of America – Focusing on the Dispute Between Fosdick and McCartney,” ACTS 신학저널(구 ACTS Theological Journal) 21 (October 30, 2014): 53–90. ↩︎
7. 7. R. A. Torrey, The Fundamentals: A Testimony To The Truth, vol. 1–4 (Los Angeles, CA: Bible Institute of Los Angeles, 1917). ↩︎
8. 8. Reinhold Niebuhr, Does Civilization Need Religion? A Study in the Social Resources and Limitations of Religion in Modern Life (New York: Macmillan, 1928), 2. ↩︎
9. 14. Will Herberg, Protestant, Catholic, Jew An Essay in American Religious Sociology (New York: Doubleday, 1955), 252; Handy, “The American Religious Depression, 1925-1935,” 13. ↩︎
10. 10. British Pathé, “Billy Sunday Burns up the Backsliding World (1926),” April 13, 2014, https://www.youtube.com/watch?v=bsUoVnIfdzo. ↩︎
11. 11. Josef Steindl, Maturity and Stagnation in American Capitalism (United Kingdom: Monthly Review Press, 1976). ↩︎
12. 12. Handy, “The American Religious Depression, 1925-1935,” 5. ↩︎
13. 13. Ibid. ↩︎
14. 14. Bernstein, “The Great Depression as Historical Problem,” 4. ↩︎
15. 15. Fred E. Foldvary, “The Austrian Theory of the Business Cycle,” The American Journal of Economics and Sociology 74, no. 2 (2015): 288. ↩︎
16. 16.  Jon Butler, Awash in a Sea of Faith: Christianizing the American People (Boston: Harvard University Press, 1990). ↩︎
17. 17. Alison Collis Greene, No Depression in Heaven: The Great Depression, the New Deal, and the Transformation of Religion in the Delta (Oxford: Oxford University Press, 2016). ↩︎
18. 18. David D. Hall, Lived Religion in America: Toward a History of Practice (Princeton, NJ: Princeton University Press, 1997). ↩︎

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Bibliography

Bernstein, Michael A. “The Great Depression as Historical Problem.” OAH Magazine of History 16, no. 1 (2001): 3–10. https://www.jstor.org/stable/25163480.

British Pathé. “Billy Sunday Burns up the Backsliding World (1926),” April 13, 2014. https://www.youtube.com/watch?v=bsUoVnIfdzo.

Butler, Jon. Awash in a Sea of Faith: Christianizing the American People. Boston: Harvard University Press, 1990.

Foldvary, Fred E. “The Austrian Theory of the Business Cycle.” The American Journal of Economics and Sociology 74, no. 2 (2015): 278–97. https://www.jstor.org/stable/43818666.

Greene, Alison Collis. No Depression in Heaven: The Great Depression, the New Deal, and the Transformation of Religion in the Delta. Oxford: Oxford University Press, 2016.

Hall, David D. Lived Religion in America: Toward a History of Practice. Princeton, NJ: Princeton University Press, 1997.

Handy, Robert T. “The American Religious Depression, 1925-1935.” Church History 29, no. 1 (January 1, 1960): 3–16. https://doi.org/10.2307/3161613.

Herberg, Will. Protestant, Catholic, Jew An Essay in American Religious Sociology. New York: Doubleday, 1955.

Hudson, Winthrop Still. The Great Tradition of the American Churches. New York: Harper and Bros., 1953.

Niebuhr, Reinhold. Does Civilization Need Religion? A Study in the Social Resources and Limitations of Religion in Modern Life. New York: Macmillan, 1928.

Samuelson, Robert J. “Revisiting the Great Depression.” The Wilson Quarterly 36, no. 1 (2012): 36–43. https://www.jstor.org/stable/41484425.

Shin, Jong Cheol. “A Study of the Fundamentalist-Modernist Controversy in the 1920s Within the Presbyterian Church in the United States of America – Focusing on the Dispute Between Fosdick and McCartney.” ACTS 신학저널(구 ACTS Theological Journal) 21 (October 30, 2014): 53–90. https://doi.org/10.19114/atj.21.2.

Steindl, Josef. Maturity and Stagnation in American Capitalism. United Kingdom: Monthly Review Press, 1976.

Stelzle, Charles. “Decline of American Protestantism.” Current History 33, no. 1 (October 1, 1930): 23–28. https://doi.org/10.1525/curh.1930.33.1.23.

Torrey, R. A. The Fundamentals: A Testimony To The Truth. Vol. 1–4. Los Angeles, CA: Bible Institute of Los Angeles, 1917. https://digitalcommons.biola.edu/the-fundamentals/.