Just What Was the Depression?

THE period of the 1930s is known as the Great Depression because many Americans lost their jobs, houses, farms, businesses, and money. A depression is a period of extremely low general economic activity and very high unemployment.

Many people believe the 1929 stock-market crash was one of the major causes of the Depression. The 1920s, nicknamed the Roaring Twenties, was an exciting time of bustling business and expensive, sometimes wild leisure activities. It was also a period of unprecedented prosperity. People were willing to take risks, and the whole country seemed to be caught up in a fad known as "speculating." Speculating is investing money in something you think will rise quickly in value and give you a quick profit when yo u sell it. Millions of people speculated in the stock market, and many did this with credit, promising to pay what they owed later.

Suddenly there was panic, and people scrambled to sell their stocks and withdraw money from their banks all at the same time. Some banks quickly ran out of money, causing many citizens to lose their life savings overnight. With fewer customers able to buy goods, industries reduced production and laid off or cut the pay of millions of workers. To make matters worse, other countries also experienced economic decline and purchased fewer American products.

The government's central bank, called the Federal Reserve System, did not provide enough new money to businesses. America's ability to produce goods simply outran its capacity to buy them. Shiny new cars and appliances sat in showrooms because people couldn't afford them. City dwellers went hungry while food rotted in fields and silos, because farmers didn't have enough customers for their products.

A common scene during the Depression was men in business suits selling apples on street corners for a few cents apiece. Many people wandered the streets looking for work or stood in bread lines, which stretched for city blocks.

Herbert Hoover, who was president from 1929 to 1933, was unable to turn the economy around. In the 1932 presidential campaign, Hoover's opponent, Franklin Delano Roosevelt, promised a "new deal for the American people," and was elected in a landslide. His New Deal programs put people back to work, and the economy started to improve slowly in the late 1930s. With the buildup in arms spending when World War II arrived in the 1940s, the economy boomed.

`Kidspace' is a place on the Home Forum pages where kids can find stories that will tickle imaginations, entertain with a tall tale, explain how things work, or describe a real-life event. These articles appear twice a month, always on a Tuesday.

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