Because the Federal government did not have that kind of power in the 1920's and 1930's. The Great Depression was caused by several factors beyond the ability of the Federal government to do anything. http://www.shambhala.org/business/goldocean/causdep.html goes in depth on the Great Depression of the 20th Century. After the depression The congress of the USA (and other bodies in other nations) made laws and regulations to give the tools to the government in order to slow down if not just stop a depression from taking place again. The "Official Start" of the 20th Century is marked by the Stock Market Crash of 29 October 1929. At the time that date was only significant to share holders and stock holders - it wasn't a year or so later that things started getting real sour - by that time folk figured out that a Depression was underway. We may already be in a Depression. It could be later officially started on a date set by say one bank closing, or the bursting of the housing bubble markets. This is the thing about depressions and recessions - granted we have general 'flags' of these things - but it is difficult to say if today we have entered into a depression or if this is just a momentary turn in the economy. Besides bailout of banks wouldn't have worked - to many other factors were in play. We hope that a bailout of the banks will strengthen the economy. Today's dollar is backed by confidence - the 1920 dollar was banked by Gold - Gold was tight in 1929 - Confidence is semi-low today. We could not throw more gold behind the dollar in 1930's, We can create confidence in the dollar - and by building confidence we keep the dollar stronger. At least that is the theory.

The only thing this money will do is bailout big corp. while our nation goes into more debt.

Well first we have some safegaurds in place now that we didn't then. And a bailout plan was proposed by 5 of the richest business men in America. They proposed a five million dollar bailout, with their own money might I add. However it soon became clear that something closer to 50 million was needed. And they weren't willing to dig that deep, so the bailout fell through.

Because the people in authority at the time thought, wrongly by current orthodoxy, that the thing that the financial system needed was the exact opposite, and the banks should retreat from lending to "solid" assets. Current belief is that the behaviour of the financial authorities, the government, and Congress turned the stock market crash of 1929 into the depression of 1931 by bungling their handling of the system. The current authorities think they know better (and I do not disagree). In particular, Ben Bernanke, Chairman of the Fed, was an academic expert on the Depression.