The Great Depression


GREAT DEPRESSION

(1929-1939)

In the Great Depression, Americans suffered the consequences of the economic boom they had enjoyed in the 1920s after WWI. There were plenty of opportunities to make & spend money. Businesses were adding jobs & investors, ordinary people started putting their money into the stock market. In the summer of 1929, businesses started to slow down; prices dropped; & investors started selling their shares. On October 29, 1929, the date known as Black Tuesday, millions of shares were traded, causing the stock market to bottom out. Panic spread, crowds gathered in bank runs, but the banks had most cash tied up in loans that were not being paid back. Many people suffered foreclosures, jobs were lost and businesses downsized, sending families into poverty. In 1933, a drought in the Midwest caused food shortages. President Hoover did not step in to help and was harshly criticized.

For example, people who lost their homes built shantytowns, and these groups were called Hoovervilles. When Hoover lost the election of 1932, Franklin Delano Roosevelt (FDR) started actions to stabilize the banking system with the Emergency Banking Act. In 1933 FDR launched a set of programs called the New Deal to create jobs and provide security. Helping to bring down the unemployment rate which peaked at 25%, the Works Progress Administration (WPA) employed millions. Another New Deal measure, the Social Security Act of 1935, guaranteed more worker benefits. While FOR provided some relief, the start of WWI pulled the US economy out of the crisis. All factories turned their production to the war effort, Americans were participating in this “arsenal of democracy” years before the country entered the armed conflict. Seventeen million new jobs were created during WWI.

  • Great Depression - a period of economic downturn that began after the stock market crash of 1929 and continued for a decade in the United States

  • Economic boom: A period of rapid economic growth characterized by increased production, high employment rates, and rising incomes.

  • Stock market: A marketplace where shares of publicly traded companies are bought and sold.

  • Black Tuesday: Refers to October 29, 1929, when the stock market crashed, leading to a severe economic downturn during the Great Depression.

  • Foreclosures: Forced sale of a home or other asset when a loan is not being repaid.

  • Downsized: Refers to the reduction in the size or scale of a business or organization, often resulting in job cuts and cost-saving measures.

  • Drought: A prolonged period of abnormally low rainfall, leading to water shortages and adverse effects on agriculture and the environment.

  • Hoovervilles: Makeshift communities of homeless people during the Great Depression, named after President Herbert Hoover, who was criticized for his handling of the crisis.

  • Shantytowns- Crudely made dwellings

  • Emergency Banking Act: A law enacted in 1933 by President Franklin D. Roosevelt to stabilize the banking system and restore public confidence in financial institutions.

  • New Deal: FDR’s plan for relief and recovery from the Great Depression.

  • Works Progress Administration (WPA): A New Deal agency established in 1935 that employed millions of people through public works projects.

  • Social Security Act: A law passed in 1935 as part of the New Deal, which established a system of social insurance, including retirement benefits, unemployment insurance, and assistance for the disabled and needy.

  • Arsenal of democracy: A term used to describe the United States' role in supplying military equipment and resources to its allies during World War II.

  • Speculation - investing in future profits of businesses

  • Share - an equal part of a company's value owned by an investor who will receive a proportional amount of its profits

  • Credit - money lent or advanced, often to be paid back with interest

  • Bank run- an event where customers demand more money than a bank has available

  • Unemployment rate- the percentage of the labor force that is not working

  • Dust Bowl: Name for plains region in the United States that suffered severe Dust storms and drought during the 1930’s