Download Great Depression

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6th Grade
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THE GREAT DEPRESSION
The Great Depression which started in 1929 was a major cataclysmic
event. No one has ever figured out the reasons for the depression. John
Kenneth Galbraith states five reasons for this event. One is the stock market
crash in 1929. There also was an overproduction of goods. He also believed
that there was a surplus of banks and that the banks did not act wisely in that
they gave out too many loans. Another factor is that there was a tariff and
war-debt policy that curtailed foreign markets for American goods. His final
reason was the reports about the economy were not as detailed as they are
today.
The Great Depression hurt the economy badly. People who had money in
the banks lost every penny. Since there was no FDIC in the time of the
depression, if a person lost his savings in a bank, he was not insured for it.
As the depression continued in America, people with no money ended up living in shacks. When
groups of these shacks were built together to form shack villages, the people called themselves
Hoovervilles because they felt President Hoover was responsible for their predicament.
On Tuesday, October 29, 1929, otherwise known as "Black Tuesday," the stock market crashed
nationwide, losing in total $14 billion dollars. Stockowners did not know what to do. The country was not
ready for such a thing. All of the banks that participated in the buying and selling of stocks closed down.
People ran to get the money out of their accounts, but there was none because the bank had used it. There
were massive amounts of suicides. Instantaneously, in one day, some people were millionaires and at the
end of the day they were homeless, only having the money that they had on them.
A couple of surviving banks collaborated and pooled their money, on Wednesday morning they
bought all that they could, hoping to bring the prices back up to where the used to be. It was no use,
stocks that had once cost $110 a share had in one day dropped to $1 a share. President Hoover had kept
on telling the people to look up and things will get back to normal; instead they just got worse and worse.
Houses and cars had to be repossessed by the companies that had sold them on credit. Except the
companies did not want them because their warehouses were already full with brand new appliances and
cars ready to be sold. The loan agencies did not want the houses because they had no one to sell them to.
The country was headed for a very deep depression and no one could stop it.
By: Matthew Brown - (adapted by Angelica Guerra)