The kinda weird thing about folk music and the depression --this post is all about the musical scene in the USA, as I am not qualified to discuss any other (yet)-- is that folk music was really an also-ran in the music industry of the time (much like it is today). What was all the rage was JAZZ, which was grabbing all the headlines and taking over the nascent airwaves. The great period of omnirecording -- during which a ton of "folk" and "race" music got recorded -- ended in about 1929, and most of the down-homier recording artists of that era had already gone back to manual labor or other non-musical careers. (Only to be rediscovered (or at least some of them) in the 1950s and 1960s by the "folk renaissance" movement.)

As jazz was taking over pop music, rural white music (for want of a better term) was evolving into what would eventually be called "Country and Western" -- and both rural and urban non-jazz "race" music (a euphemism for music by blacks) was evolving into what would eventually be called "Rhythm and Blues."

It was a time of great change in "folk" music, at least in the United States of America, and a fascinating period to study.

A good history of the blues, and one of early country music, would be among your best choices for research material here.

Do let us know how your project turns out. Good luck!

Alex