The Great Depression

The Great Depression was a worldwide business slump on the 1930’s. It ranked as the worst and longest period of high unemployment and low business activity in modern times. The Great Depression began in October 1929, when stock values in the United States dropped rapidly. Thousands of stockholders lost large sums of money. Many of these stockholders were even wiped out. Banks, factories, and stores closed and left millions of Americans jobless and penniless. Many people had to depend on the government or charity to provide them with food.

During the 1920’s, many bank failures, together with low incomes among farmer and factory workers, helped set the stage for the depression. From 1925 to 1929, the average prices of common stocks on the New York Stock Exchange doubled. Rising stock values encouraged many people to buy stocks in hope of making large profits following future price increases. Stock values dropped rapidly on October 25, 1929, now known as Black Thursday. Almost all economists agree that the stock market crash of 1929 started the depression. Most stock prices remained steady on Friday and Saturday. But the next Monday, stock prices fell again. Then, on Tuesday, October 29, stockholders panicked and sold a record of 16,410,030 shares of stock. Thousands of people lost huge sums of money as stock values fell far below the prices paid for the stock. Banks and businesses had also bought stock, and many lost so much that they had to close. Stock values fell almost steadily for the next three years.

The Great Depression differed in both length and harshness from previous depressions in the United States. In earlier depressions, business activity had started to pick up after one or two years. But from October 1929, until Franklin D. Roosevelt became President in March 1933, the economy slumped almost every month. Business failures increased rapidly among banks, factories, and stores, and unemployment soared. Millions of people lost their job, savings, and home. The economic breakdown from 1930 to 1933 was the lowest ever. Prices of industrial stocks fell about 80 per cent. Banks and individuals with investments in the stock market lost large sums. Banks had also loaned money to many people who could not repay it. The deepening depression forced large numbers of people to withdraw their savings. Banks had great difficulty meeting the withdrawals, which came at a time when the banks were unable to collect on many loans. Between January 1930 and March 1933, about 9,000 banks failed. The bank failures wiped out the savings of millions of people. From 1925 to 1933, unemployment reached a record high of 13 million. Many people who kept of found jobs had to take salary cuts.

Human Suffering became a reality for millions of American s as the depression continued. Many died of disease resulting from lack of nutrition. Thousands lost their homes because they could not pay the mortgage. In 1932, at least 25,000 families and more than 200,000 young people wandered through the country seeking food, clothing, shelter, and a job. Many youths traveled in freight trains and lived near train yards in camps called hobo jungles. The homeless and jobless travelers obtained food from welfare agencies or religious missions in towns along the way. Most of their meals consisted of soup, beans, or stew and had little nourishment. The travelers begged for food or stole it if they could not get something to eat in any other way. Many ate scraps of food from garbage cans. Many people who lost their home remained in the community. Some crowded into the home of relative. Others moved to a shabby section of town and built shacks from flattened tin cans and old crates.

The Great Depression affected almost every nation. It caused a sharp decrease in world trade because each country tried to help its own industries by raising tariffs on imported goods. The depression caused some nations to change their leader and their type of government. The poor economic conditions of these times led to the rise of the German dictator Adolf Hitler and to the Japanese invasion of China.

The depression also had long lasting effects on the United Sates people and government. For example, the government took more responsibility than ever before for strengthening the nation’s economy. In addition, many Americans who lived during the depression stressed the importance in later years of inquiring such material comforts as appliances and a car. Also, the depression changed the attitudes of many Americans toward business and the federal government. Before the depression, most people regarded bankers and business executives as the nation’s leaders. After the stock market crashed and these leaders could not relieve the depression, Americans lost faith in them. As a result, many Americans decided that the government – not business – had the responsibility to maintain the national economy.