The Great Depression was a severe economic crisis that lasted from 1929 to 1939. It caused widespread poverty, unemployment, and a huge slowdown in the economy. It affected countries all over the world, making it one of the most significant events in modern history.
What Caused the Great Depression?
1. Stock Market Crash (1929)
- People invested heavily in the stock market, hoping to make quick money.
- In October 1929, stock prices fell sharply, leading to massive losses.
2. Banks Failing
- Many banks loaned money recklessly and couldn’t get it back.
- When people rushed to withdraw their money, banks ran out of cash and shut down.
3. Less Spending and Investment
- People lost jobs and savings, so they stopped buying goods.
- This caused businesses to cut back on production and fire more workers.
4. Trouble in Farming
- Farmers grew too much food, causing prices to drop.
- Droughts and dust storms (called the Dust Bowl) ruined crops in many areas.
5. Global Problems
- Countries taxed each other’s goods, reducing trade.
- The economic problems in Europe made things worse worldwide.
What Happened During the Great Depression?
1. Massive Job Losses
- In the U.S., about 25% of people had no jobs by 1933.
- Similar issues happened in other countries.
2. Falling Prices (Deflation)
- Prices of goods dropped, but people still couldn’t afford to buy them.
- Workers were paid less or not at all.
3. Bank Closures
- Thousands of banks failed, and people lost their savings.
- Businesses couldn’t get loans to stay open.
4. Poverty Everywhere
- Homelessness increased, and many lived in makeshift shelters called "Hoovervilles."
- Soup kitchens and breadlines became common for people to get food.
Impact on Society
1. Hardship and Hunger
- Families struggled to buy food and clothes.
- Many children had to leave school to help their families.
2. Changes in Government Policies
- Governments started playing a bigger role in helping the economy.
- In the U.S., this led to new programs to create jobs and protect people.
3. Art and Literature
- Books like The Grapes of Wrath by John Steinbeck showed how hard life was for people during this time.
How Did the World Respond?
1. The New Deal (U.S.)
- President Franklin D. Roosevelt introduced programs to:
- Create jobs (e.g., building roads and schools).
- Support farmers and businesses.
- Provide pensions for older people (Social Security).
2. Other Countries
- Some focused on building their military to boost their economies.
- New ideas, like spending money to help the economy grow, became popular (Keynesian economics).
How Did the Great Depression End?
1. Recovery in the Late 1930s
- Governments spent more money to create jobs and rebuild economies.
- World War II helped end the Depression by increasing demand for goods and creating jobs
2. Long-Term Effects
- Countries introduced rules to prevent future economic crashes, like regulating banks and the stock market.
Why It Still Matters
The Great Depression showed how important it is to manage economies carefully. It also taught the world the value of safety nets, like job programs and savings protections, to help people during tough times.