The Great Depression

Most Americans alive during the 1930’s were either jobless, homeless, or starving. Some of them were all of these. This was all because of the Great Depression. The Great Depression was very harsh and miserable. The main reasons why were the stock market crash, the drought, high unemployment, and Presidents Herbert Hoover and Franklin Delano Roosevelt. This whole experience started with the stock market crash. So many people lost their jobs; almost a quarter of Americans were jobless.

During the summer of 1929, the stock market reached record highs. Many people invested in the stock market, and many of these people’s wealth depended on buying these stocks on margin. Buying stocks on margins means that you pay part of the price with your own money and the rest with loans. This created a debt that would be very hard to repay if the value of these stocks ever fell, and fall is exactly what they did. With little warning, the stock prices suddenly dropped. On October 29, 1929 the stock market crashed. The Dow Jones Industrial average fell about twenty-three percent. That day was nicknamed ‘Black Tuesday’ because so many people thought that day was ‘dark.’ Investors lost almost 8 billion dollars that one day.

Once people lost confidence in the stock market, everything went off in a chain reaction. Stock brokers demanded that investors pay their margin loans and the banks asked the brokers to pay off their loans. In a very short period of time, millions of people withdrew all their money from banks causing the banks to close temporarily or permanently; this was also referred to as a “run on the bank.” From 1929-1934, the total number of banks declined by 33 percent. The most dramatic banking crisis in U.S. history took place in early 1933, with an escalation of runs on the banks by very nervous and frightened American citizens. Stocks that sold for ninety dollars a share were now only worth only two or three.

Many people lost their entire life savings. Many came...