An Overview of the Great Depression
Jessica McBirney
On a fateful Tuesday in October 1929, American citizens experienced the beginning of the worst economic disaster in the country's history. The day marked the beginning of the Great Depression, a severe economic crisis that lasted for more than ten years and hurt millions of people around the country.
The Great Depression had many causes. In fact, economists still debate over all the factors that led to the crisis. The following are some of the most important causes:
The Stock Market
Maybe you have heard your parents or news commentators talk about the stock market. Essentially, it is where people can buy stocks, or very small pieces, of big companies like Walmart or Facebook. If the company makes money, the stock-holder gets also gets a small profit. Investing in a stock is like taking a gamble because the company could earn a lot of money, or it could lose money.
In the years before 1929, the stock market was an extremely popular way for everyday people to earn some extra money. Because of this, the prices of stocks kept getting higher and higher. By 1929, many prices were much higher than the actual values of companies.
Some people started getting skeptical. Prices could not keep going up forever. So they started selling their stocks while they were still at high prices. More and more people started catching on until everyone was scrambling to sell their stocks at once. There was no one left to buy all these available stocks, so the prices dropped steeply.
This caused what is known as a stock market crash. In just one day, on October 29, 1929, the whole stock market lost over $14 billion.
Bank Failures
During the popularity of the stock market, most banks had very few rules about loaning out money. They would loan money to customers so those customers could go use it to buy more stocks.
When the stock market lost so much money, suddenly all those customers had no way to pay back their loans. But when people heard about the crash, they started to panic and wanted to pull the money out of their savings accounts just to keep it safe.
With no money back from all the loans they had given out, the banks did not have enough money supply to also pay out everything from everyone's savings. The bank failures rippled throughout the nation, causing even more economic problems and panic for average Americans.
The Dust Bowl
A record-setting drought hit the middle states, especially Oklahoma, around the same time. The timing could not have been worse. Farmers, who usually remained stable during economic uncertainty because they could at least grow their own food, were suddenly in just as much trouble as the rest of the country.
The drought brought hot, dry winds sweeping across the plains, blowing huge clouds of dust across the plains and into many peoples' houses and lungs. Families could not stay in the area. They packed up and left the Great Plains, heading west to places like California to find work. Unfortunately, other states already had their own unemployment problems; there were not enough jobs for the newcomers.
Effects of the Depression
At the beginning of the financial problems, few people predicted the crisis would last over a decade. But the problems were more extensive and much deeper than analysts realized at first.
One of the most important effects of the Great Depression was unemployment. At its peak in 1933 around 25% of adults were unemployed - this means 1 in 4 adults did not have jobs.
Without steady income, many families were forced out of their homes. Some found other family members to live with, while others had to take to the streets. Some people moved into small shanty towns called Hoovervilles, named after the president at the time Herbert Hoover. These people often had to rely on charity soup kitchens to get enough food to eat.
Political Interventions
In 1932, near the worst of the Depression, President Franklin D. Roosevelt was elected. He immediately started working to fix the problems. The set of policies and government programs he instituted are known as the New Deal.
To address the banking issues, he temporarily closed all banks to give them a chance to restructure themselves. He set guidelines for future bank operations. He also made more rules for how investors on the stock market could buy and sell stocks more responsibly.
To help families affected by unemployment, he created many employment programs. Groups like the Civilian Conservation Corps (CCC) and Works Progress Administration (WPA) used government funds to pay young men for services like building roads and cleaning parks. This gave families some money to start buying necessities again.
President Roosevelt started dozens of programs during his time in the White House. Not all of them were successful, and a few were even deemed unconstitutional, but many did have positive results.
Culture Amid Crisis
Even though Americans faced one of the greatest challenges in our nation's history during the 1930s, they were able to produce art and entertainment to raise everyone's spirits.
Radio became a central aspect of many people's home lives. They could listen for free to comedy shows like Amos ‘n' Andy and The Jack Benny Show. President Roosevelt also made regular speeches on the Radio, known as his fireside chats, to reassure the American people and explain his newest New Deal policies.
Movies continued to grow in popularity. Many movies featured tough gangsters and witty city-dwellers with exciting plots. Viewers could escape into this world for a few hours any time they watched a movie.
Music portrayed a more complex, and for many people more relatable, view of society during the Great Depression. Some songs recalled the better days of the 1920s when the country was happy. The mid-1930s introduced swing music and the big band genre, full of upbeat and exciting melodies. The dancing that accompanied it was fast-paced. But other artists, like Bing Crosby, did not shy away from writing music that reflected the hard times. His song "Brother, Can You Spare a Dime?" became popular.
Recovery
Even though the worst of the Great Depression came in 1933, its negative effects and high unemployment continued throughout the 1930s.
When the United States entered World War II in 1941, things began to change. The military needed new equipment and supplies, so thousands of new manufacturing jobs opened to support the war effort. This cut down on the still-soaring unemployment rates. Living standards still remained relatively low, because so many factories built war materials instead of every day goods for households. Still, Americans began to regain their sense of hope for the future. After the war ended, their hopes were realized as Living standards rose and economic prosperity spread across the country.
The Great Depression lives on through famous literature like John Steinbeck's novel The Grapes of Wrath, published in 1939. But the Great Depression's legacy may best be seen in the Social Security Act, which was passed by Congress in 1935. Since then the government has provided Americans with pensions for the retired, as well as assistance to the unemployed and those with disabilities.
The Great Depression had many causes. In fact, economists still debate over all the factors that led to the crisis. The following are some of the most important causes:
The Stock Market
Maybe you have heard your parents or news commentators talk about the stock market. Essentially, it is where people can buy stocks, or very small pieces, of big companies like Walmart or Facebook. If the company makes money, the stock-holder gets also gets a small profit. Investing in a stock is like taking a gamble because the company could earn a lot of money, or it could lose money.
In the years before 1929, the stock market was an extremely popular way for everyday people to earn some extra money. Because of this, the prices of stocks kept getting higher and higher. By 1929, many prices were much higher than the actual values of companies.
Some people started getting skeptical. Prices could not keep going up forever. So they started selling their stocks while they were still at high prices. More and more people started catching on until everyone was scrambling to sell their stocks at once. There was no one left to buy all these available stocks, so the prices dropped steeply.
This caused what is known as a stock market crash. In just one day, on October 29, 1929, the whole stock market lost over $14 billion.
Bank Failures
During the popularity of the stock market, most banks had very few rules about loaning out money. They would loan money to customers so those customers could go use it to buy more stocks.
When the stock market lost so much money, suddenly all those customers had no way to pay back their loans. But when people heard about the crash, they started to panic and wanted to pull the money out of their savings accounts just to keep it safe.
With no money back from all the loans they had given out, the banks did not have enough money supply to also pay out everything from everyone's savings. The bank failures rippled throughout the nation, causing even more economic problems and panic for average Americans.
The Dust Bowl
A record-setting drought hit the middle states, especially Oklahoma, around the same time. The timing could not have been worse. Farmers, who usually remained stable during economic uncertainty because they could at least grow their own food, were suddenly in just as much trouble as the rest of the country.
The drought brought hot, dry winds sweeping across the plains, blowing huge clouds of dust across the plains and into many peoples' houses and lungs. Families could not stay in the area. They packed up and left the Great Plains, heading west to places like California to find work. Unfortunately, other states already had their own unemployment problems; there were not enough jobs for the newcomers.
Effects of the Depression
At the beginning of the financial problems, few people predicted the crisis would last over a decade. But the problems were more extensive and much deeper than analysts realized at first.
One of the most important effects of the Great Depression was unemployment. At its peak in 1933 around 25% of adults were unemployed - this means 1 in 4 adults did not have jobs.
Without steady income, many families were forced out of their homes. Some found other family members to live with, while others had to take to the streets. Some people moved into small shanty towns called Hoovervilles, named after the president at the time Herbert Hoover. These people often had to rely on charity soup kitchens to get enough food to eat.
Political Interventions
In 1932, near the worst of the Depression, President Franklin D. Roosevelt was elected. He immediately started working to fix the problems. The set of policies and government programs he instituted are known as the New Deal.
To address the banking issues, he temporarily closed all banks to give them a chance to restructure themselves. He set guidelines for future bank operations. He also made more rules for how investors on the stock market could buy and sell stocks more responsibly.
To help families affected by unemployment, he created many employment programs. Groups like the Civilian Conservation Corps (CCC) and Works Progress Administration (WPA) used government funds to pay young men for services like building roads and cleaning parks. This gave families some money to start buying necessities again.
President Roosevelt started dozens of programs during his time in the White House. Not all of them were successful, and a few were even deemed unconstitutional, but many did have positive results.
Culture Amid Crisis
Even though Americans faced one of the greatest challenges in our nation's history during the 1930s, they were able to produce art and entertainment to raise everyone's spirits.
Radio became a central aspect of many people's home lives. They could listen for free to comedy shows like Amos ‘n' Andy and The Jack Benny Show. President Roosevelt also made regular speeches on the Radio, known as his fireside chats, to reassure the American people and explain his newest New Deal policies.
Movies continued to grow in popularity. Many movies featured tough gangsters and witty city-dwellers with exciting plots. Viewers could escape into this world for a few hours any time they watched a movie.
Music portrayed a more complex, and for many people more relatable, view of society during the Great Depression. Some songs recalled the better days of the 1920s when the country was happy. The mid-1930s introduced swing music and the big band genre, full of upbeat and exciting melodies. The dancing that accompanied it was fast-paced. But other artists, like Bing Crosby, did not shy away from writing music that reflected the hard times. His song "Brother, Can You Spare a Dime?" became popular.
Recovery
Even though the worst of the Great Depression came in 1933, its negative effects and high unemployment continued throughout the 1930s.
When the United States entered World War II in 1941, things began to change. The military needed new equipment and supplies, so thousands of new manufacturing jobs opened to support the war effort. This cut down on the still-soaring unemployment rates. Living standards still remained relatively low, because so many factories built war materials instead of every day goods for households. Still, Americans began to regain their sense of hope for the future. After the war ended, their hopes were realized as Living standards rose and economic prosperity spread across the country.
The Great Depression lives on through famous literature like John Steinbeck's novel The Grapes of Wrath, published in 1939. But the Great Depression's legacy may best be seen in the Social Security Act, which was passed by Congress in 1935. Since then the government has provided Americans with pensions for the retired, as well as assistance to the unemployed and those with disabilities.