AAmmeerriiccaann MMoommeennttss TThhee GGrreeaatt DDeepprreessssiioonn CCoorryy GGuunnddeerrssoonn American Moments THE GREAT DEPRESSION By Cory Gunderson VISIT US AT WWW.ABDOPUB.COM Published by ABDO Publishing Company, 4940 Viking Drive, Suite 622, Edina, Minnesota 55435. Copyright ©2004 by Abdo Consulting Group, Inc. International copyrights reserved in all countries. No part of this book may be reproduced in any form without written permission from the publisher. Printed in the United States. Edited by: Melanie A. Howard Contributing Editor: Tamara L. Britton Interior Production and Design: Terry Dunham Incorporated Cover Design: Mighty Media Photos: Corbis, Library of Congress Library of Congress Cataloging-in-Publication Data Gunderson, Cory Gideon. The Great Depression / Cory Gunderson. p. cm. -- (American moments) Includes index. ISBN 1-59197-286-8 1. Depressions--1929--United States--Juvenile literature. 2. Stock Market Crash, 1929--Juvenile literature. 3. United States--Economic conditions--1918-1945--Juvenile literature. 4. New Deal, 1933-1939--Juvenile literature. 5. Europe--Economic conditions--1918-1945--Juvenile literature. [1. Depressions--1929. 2. Stock Market Crash, 1929. 3. United States--Economic conditions--1918-1945. 4. Europe--Economic conditions--1918-1945.] I. Title. II. Series. HB37171929 .G86 2004 338.5’42’097309043--dc22 2003069307 C ONTENTS The Depression Like No Other . . . . . . . . . . .4 A Lesson in Economics . . . . . . . . . . . . . . . . . .6 The Roaring Twenties . . . . . . . . . . . . . . . . . .12 The Crash of October 29, 1929 . . . . . . . . . .16 A Nation in Debt . . . . . . . . . . . . . . . . . . . . . .20 Worldwide Impact . . . . . . . . . . . . . . . . . . . .26 New President, New Deal . . . . . . . . . . . . . .30 A Changed Nation . . . . . . . . . . . . . . . . . . . . .40 Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 Fast Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . .44 Web Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48 American Moments THE DEPRESSION LIKE NO OTHER The Great Depression of the 1930s was not the only economic decline in U.S. history. Others occurred in 1873–1879, 1893–1897, 1907–1908, and 1920–1921. But the suffering that gripped American citizens during the Great Depression was so severe that it has been widely accepted as the worst in U.S. history. During the Great Depression, people lost their homes, farms, and businesses. Many people died from disease and malnutrition. Jobs became scarce, and poverty plagued the nation. In the early 1930s, the U.S. government decided to take action. It began taking more control of business than it had in the past. By the time the Great Depression ended, the role of government in the economy had forever changed. Above: A mother comforts her children 4 after they learn they have lost their home. New York police officers help distribute food to needy men and women. American Moments A LESSON IN ECONOMICS The word economy refers to a system that regulates the distribution of goods and services that people use. It is an enormous and complex mechanism that cannot be seen. But it is very real. It is the way a community, region, or country produces, distributes, and consumes its goods and services. A good is a product. Items such as shaving creams, cars, apples, watches, and doorknobs are goods. Services are different. A service is something that someone else does for you. Getting a cavity filled is a service. So is an eye exam, a haircut, or a car repair. Most goods and services cost money. Just as people cannot afford to buy all the goods and services they want, no country is able to produce everything that its citizens want. The problem of having less than we want is called scarcity. Governments, like people, must decide how they will best use the limited resources that they have. Each place a good or service can be bought and sold is called a market. A farmer’s roadside vegetable stand is a market. Although on the Internet, eBay is also a market. 6 A man sells apples on a busy street corner during the Great Depression. The stock market is another example of a large market. This is the place where stocks are bought and sold. Stocks are portions of a business that are sold to raise money. The money raised by the sale of stocks allows the business to invest in itself and expand. In return, the buyer of the stock, the stockholder, owns part of the business. If the business makes money, the stockholder will, too. But if the business loses money, a stockholder can lose part or all of his or her investment. This means that there is always a risk when buying stocks. A bull market happens when more stock is being bought than sold. A bull market represents a period of time when investors believe that stock prices will continue to rise. They believe that their investments will keep growing in value. 8 STOCK EXCHANGE This photo shows an area of New York that used to be called the Curb Exchange. The Curb Exchange was located on Wall Street and was a place where stock traders gathered to do business. Eventually, the market moved indoors and was renamed the American Stock Exchange. The opposite stock market condition is a bear market. During a bear market, people do not have much faith in the stock market. Investors fear that their stocks will decrease in value. People start selling their stocks because they think that they are going to lose money. Stock prices decrease as people sell their stocks. Bear markets usually happen when people stop buying goods. Businesses then stop making the products. This means the workers have nothing to make, and they lose their jobs. The economy is in danger when there is less buying and selling because it causes a decrease in production, prices, income, and jobs. It slows down the economy. Times when the economy slows down are called recessions. A recession can lead to a depression, or low point in the economy. 9