THE GREAT DEPRESSION By Robert Rivera

The Great DepressionThe Great Depression was an economic slump in North America, Europe, and other industrialized areas of the world that began in 1929 and lasted until about 1939. It was the longest and most severe depression ever experienced by the industrialized Western world.

The Great Depression began in the United States but quickly turned into a worldwide economic slump owing to the special and intimate relationships that had been forged between the United States and European economies after World War I.

Causes of the Great DepressionThe farm depression of the 1920's. Although the 1920's were a

prosperous period for business, most farmers did not prosper. Prices of farm products fell about 40 percent in 1920 and 1921, and they remained low through the 1920's. As a result, some farmers lost so much money that they could not pay the mortgage on their farm. These farmers then had to either rent their land or move.

Bank failures increased during the 1920's. Most of them occurred in agricultural areas because farmers experienced such poor conditions. About 550 banks went out of business from July 1, 1928, to June 30, 1929, the period of greatest prosperity in the 1920's.

Uneven distribution of income. In addition to the farmers, workers in the coal, railroad, and textile industries failed to share in the prosperity of the 1920's. Industrial production increased about 50 percent, but the wages of industrial workers rose far more slowly. As a result, these workers could not buy goods so fast as industry produced them. Many people had to buy on credit. After a while, workers reduced their spending to hold down their debts. Then the amount of money in circulation decreased, and business became even worse.

The stock market crash. From 1925 to 1929, the average price of common stocks on the New York Stock Exchange more than doubled. Rising stock values encouraged many people to speculate -- that is, buy stocks in hope of making large profits following future price increases.

Causes of the Stock Market Crash

The 1920's were a time of unbelievable prosperity. The stock market was going through the roof and the United States seemed to have the formula for limitless prosperity. However, the same formula that generated all of that profit would also be the cause of Black Tuesday.Investment during the 1920's was based on the unstable basis of margin buying. Investors bought borrowed money from their brokers, who went to banks for that money. When stocks failed and investors needed to default, the money was permanently lost.

President Hoover

One of Hoover’s first acts was to implore business leaders not to cut wages during the crisis. Hoover believed that if workers had higher wages, they would have more purchasing power to stimulate the economy. However when consumer demand decreases businesses must either cut wages or cut workers to stay afloat. If wages are not cut, the result is unemployment. By the time Hoover left office in 1933, unemployment was near a staggering 25 percent.

Great Depression Effects on Americans

The Depression changed the family in dramatic ways. Many couples delayed marriage - the divorce rate dropped sharply (it was too expensive to pay the legal fees and support two households); and birth rates dropped below the replacement level for the first time in American history. Families suffered a dramatic loss of income during Herbert Hoover's term in office, dropping 35% in those four years to $15M.

This put a great deal of stress on families. Some reacted by pulling together, making due with what they had, and turning to family and friends for help. Only after exhausting all alternatives would they reluctantly look to the government for help. Other families did not fare as well, and ended up falling apart.

Bread LineWashington, DC, October 1930

Great Depression Effect on WomenOn the other hand, women

found their status enhanced by their new roles. Left with little choice, they went against the historic opposition to married women working outside the home to help support their families. Black women especially found it easier to obtain work than their husbands, working as domestic servants, clerks, textiles workers and other occupations. This employment increased their status and power in the home, gaining them a new voice in domestic decisions.

A mother and her daughters photographed on the road

Businesses Failures Great Depression was a worldwide business slump of the 1930's. It ranked as the worst and longest period of high unemployment and low business activity in modern times. 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.

The collapse in the banking sector precipitated a parallel contraction in the money supply.  A severe contraction in the money supply, whether as a result of a policy or as a result of bank failures, then leads to a severe contraction in economic activity.

The Dust BowlIn previous depressions, farmers were usually safe from the severe effects of a depression because they could at least feed themselves. Unfortunately, during the Great Depression, the Great Plains were hit hard with both a drought and horrendous dust storms. Small farmers were hit especially hard. Even before the dust storms hit, the invention of the tractor drastically cut the need for manpower on farms. These small farmers were usually already in debt, borrowing money for seed and paying it back when their crops came in. When the dust storms damaged the crops, not only could the small farmer not feed himself and his family, he could not pay back his debt. Banks would then foreclose on the small farms and the farmer's family would be both homeless and unemployed.

Riding the Rails During the Great Depression, millions of people were out of work across the United States. Unable to find another job locally, many unemployed people hit the road, traveling from place to place, hoping to find some work. A few of these people had cars, but most hitchhiked or "road the rails." Large portion of the people who road the rails were teenagers, but there were also older men, women, and entire families who traveled in this manner. They would board freight trains and crisscross the country, hoping to find a job in one of the towns along the way.

Roosevelt and the New Deal During the 1932 presidential election,

Hoover did not stand a chance at reelection and Franklin D. Roosevelt won in a landslide. People of the United States had high hopes that President Roosevelt would be able to solve all their woes. As soon as Roosevelt took office, he closed all the banks and only let them reopen once they were stabilized. Next, Roosevelt began to establish programs that became known as the New Deal. These New Deal programs were most commonly known by their initials, which reminded some people of alphabet soup. Some of these programs were aimed at helping farmers, like the AAA (Agricultural Adjustment Administration). While other programs, such as the CCC (Civilian Conservation Corps) and the WPA (Works Progress Administration), attempted to help curb unemployment by hiring people for various projects.

The New DealRoosevelt believed the federal government had the chief responsibility of fighting the depression. He called Congress into a special session, now called the Hundred Days, to pass laws to relieve the depression. Roosevelt called his program the New Deal. The laws established by the New Deal had three main purposes. First, they provided relief for the needy. Second, they aided nationwide recovery by providing jobs and encouraging business. Third, the laws tried to reform business and government so that such a severe depression would never happen in the United States again.

Changes during the DepressionThe Great Depression caused many changes in the United

States. It brought new laws that gave the government far more power than at any previous time in the nation's history. It also changed the attitudes of countless Americans toward various aspects of life.

New government policies that resulted from the New Deal increased federal control over banks and the stock market. Laws of the New Deal also gave the government more power to provide money for the needy. Ever since the depression, both Democratic and Republican administrations have broadened the powers of the federal government. For example, the government now provides hospital and medical insurance for the aged. The government may also regulate price and wage increases to try to keep the cost of living from rising.

Ending of The Great DepressionThe United States began emerging

from the Depression as it borrowed and spent $1 billion to build its armed forces. From 1939 to 1941, when the Japanese attack Pearl Harbor, U.S. manufacturing had shot up a phenomenal 50 percent.Roosevelt began relatively modest deficit spending that arrested the slide of the economy and resulted in some astonishing growth numbers. When 1936 saw a phenomenal record of 14 percent growth, Roosevelt eased back on the deficit spending, worried about balancing the budget. But this only caused the economy to slip back into a recession in 1938.