What is the Great Depression?
The Great Depression was a period of time when the economy faced a crisis due to the crash of the U.S. stock market. Although America was an industrialized country, there were many weaknesses within the economy. Farmers were unable to pay off bank loans because they had competition with farmers from other countries. Farmers didn't have enough money to pay the loans, so some banks had to shut down. Also, wealth was not evenly distributed. This meant poor families couldn't buy a lot of goods. As a result, factories made fewer profits. A majority of the people had started to buy stocks because the economy was booming. Many middle-class people would buy stocks on a margin, which was basically a loan from stockbrokers.
On October 29, 1929 everything had changed. The stock market crashed. The New York Stock Exchange closed down 12%, which marked the beginning of the Great Depression. Picture above on the right hand corner shows the New York Stock Exchange. This day is referred to as “Black Tuesday." Picture on the left shows a newspaper article about the stock market crash of 1929. Because of this crash, millions of dollars were lost. Although the stock market crash wasn't the only reason why the Great Depression occurred, it was a major component. As a result of the stock market crash, banks were forced to shut down because people couldn't afford to pay back the loans and because millions of people's savings were lost. As a result, there was a great increase of unemployed people, and many who were able to get jobs had low wages. This is officially when the U.S. entered the depression. The United States was tremendously affected by the depression. The Great Depression lasted from 1929-1941. It ended when the U.S. entered World War II.