The Great Depression
In the summer of 1929, people in the United States began to spend less. Thus, more products were building up in storage for manufacturers and stores. Debts began to increase. Stock market prices began to climb. A stock is a share or piece of a company which ordinary citizens can buy. They may or may not receive earnings on that stock depending on the business trends.
On October 4, 1929, stock owners began selling their stocks in great quantities. The stock market was said to have collapsed. The day was called 'Black Thursday.' On 'Black Tuesday', 5 days afterwards, millions more stocks were sold. Millions of shares couldn't be sold and had no value anymore. Many people who had put money into these stocks lost everything.
Factories slowed down because people didn't have money to buy products. Fewer workers were needed, so many people became unemployed. Wages for the working people went down. Many people lost their houses because they had no money to pay their mortgages.
These conditions spread around the world. The period from 1929-1939 was known as the Great Depression. A depression is a time of a great downturn in business profits. By 1931, 6 million people were out of work. Many had to try to get free food by standing in lines at various soup kitchens provided by those who could help. Businesses collapsed. Farmers couldn't sell their crops and left them in the fields because they couldn't afford to harvest them. Beginning in 1930, people started to withdraw all their savings from their bank accounts because they were afraid the banks would fail and did this for 3 more years. Many banks went out of business.
President Herbert Hoover didn't think that the federal government should get involved in trying to solve the situation. However, in the fall of 1932, Franklin Delano Roosevelt was elected President. By inauguration day in March, all banks had been told to close for 4 days (a 'bank holiday'). New banking laws would be passed and only the strong banks would reopen.
President Roosevelt spoke regularly on the radio to encourage the people of the United States. These talks were called 'fireside chats.' During his first 100 days in office, the President passed laws to try to get business going again and to help farmers with their crops. He created the FDIC, the Federal Deposit Insurance Commission, to protect the money people put into banks in the future. He also set up the SEC, Securities and Exchange Commission, to prevent a serious stock market crash from happening again.
President Roosevelt put into place a program called the New Deal. Included in this program was the TVA, Tennessee Valley Authority, which involved building dams and providing water for the Tennessee Valley. The WPA, the Works Progress Administration, hired thousands of men to work on projects around the country. Beginning in 1933, the economy began to improve and did so for three years.
In 1937, another serious downturn occurred and wiped away much of the progress which had been made. Hardships throughout Europe made it easier for Adolph Hitler to rise to power in Germany. In 1939, Hitler's troops began to invade neighboring countries. The United States then began manufacturing military supplies and equipment. Many more jobs were now available. The United States wanted to support its friends Germany and France. They had been invaded by Hitler's forces.
After the United States was attacked at Pearl Harbor, Hawaii, in 1941, production and manufacturing began to increase and unemployment went down to what it was before the Great Depression.
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