What Caused the Great Depression?
A dusty 1930s American street where the scribe stands in front of a shuttered bank, pointing to a long breadline of families and explaining why so many people lost their savings and jobs.
- Name the year the Great Depression began and the event that triggered it.
- Describe two causes that made the Great Depression worse.
- Identify two effects the Great Depression had on everyday families.
- Explain one way communities helped each other survive hard times.
Key terms
- stock market
- A place where people buy and sell shares, meaning small pieces of ownership in companies
- Great Depression
- The severe worldwide economic downturn that began in 1929 and lasted through the 1930s
- bank failure
- When a bank runs out of money and closes, so customers lose the savings they deposited
- soup kitchen
- A place run by charities or neighbors that gives free meals to people in need
From Crash to Collapse
The 1929 stock market crash wiped out the savings many people had invested in shares. Frightened customers rushed to pull their money out of banks, and because banks had loaned much of it out, they ran short of cash and closed. Each bank failure destroyed more savings, spreading fear and shrinking the money people had to spend.
A Downward Spiral
When families had no money, they bought less. Stores and factories then sold less, so they laid off workers, who in turn had no money to spend. This chain reaction is why one crash could grow into years of hardship: each problem caused the next, pulling millions into unemployment, lost homes, and hunger across the country.
Worked examples
Explain why the Depression got worse over time.
- Begin with the spark: the 1929 crash destroyed savings and confidence.
- Trace the first effect: scared people pulled money from banks, causing banks to fail.
- Follow the next link: with savings gone, families spent less and businesses cut jobs.
- See the loop: more job losses meant even less spending, deepening the crisis year after year.
Answer: Lost savings led to less spending, which caused job cuts, which caused even less spending — a spiral that deepened the Depression.
Activity
Drag each word to show if it is a CAUSE or an EFFECT of the Great Depression.
Practice
Explain the difference between a cause and an effect of the Great Depression.
Describe one way ordinary neighbors helped each other survive the hard times.
Common mistakes to avoid
- A world war started in 1929 and caused the Depression.World War II did not begin until 1939; the 1929 stock market crash is what triggered the Depression.
- The government immediately sent money to every family.Large relief programs arrived only gradually through the 1930s, not right away.
Check your understanding
What event in 1929 triggered the start of the Great Depression?
Which of these was a CAUSE that made the Great Depression worse?
How did many communities help each other survive the Great Depression?
Recap
The Great Depression began with the 1929 stock market crash, worsened by bank failures and too much borrowing, and caused widespread job and home losses that communities met with soup kitchens and sharing.
Reflect
Why might helping each other matter most exactly when times are hardest?