The Great Depression

A very serious economic depression that affected the U.S. economy for about a decade. It all started in October 1929. The stock market dropped suddenly and a lot of stocks lost most or all of their value. Many investors found that all the money they had put into the stock market was lost and businesses were ruined. Those investors who had borrowed money to pay for their investments or had used their investments to borrow money were especially in big trouble. Because of the crash, businesses closed and people stopped spending money. That led to a general slow-down of the economy and people lost jobs.

As people rushed to get the last of their savings out of the banks, banks couldn't come up with the demand and many of them closed—in some cases without giving back money owed to the customers. Then, to make the news even worse, a big drought hit, affecting farmers and food production across the country. Millions of people needed the government and charity to get food or to have a home. The impact was so bad and the U.S. economy was so important that other countries were affected, too. Eventually, the U.S. decided to enter World War I, and lots of jobs were created through spending on the military (and the spending needed to send soldiers overseas).

The Great Depression has a big impact on the economy, even today. Because of what happened, many charitable groups and government programs were set up. For example, some farm subsidies for farmers date back to the Great Depression. Because of the Great Depression, there were also many changes made to the economy. New rules were set up to protect customers. The fact that your bank account money is guaranteed or the fact that brokers need to disclose information about your investments? That all dates back to changes made after the Great Depression.

For the whole scoop, head on over to our Learning Guide.