Effects of the Great Depression

Lesson Plan - Get It!

Audio:

Before continuing, if you missed the Related Lesson on the Great Depression's cause, you can find it in the right-hand sidebar.

The year is 1931, and the people in this photograph are standing in a bread line.

On the billboard, the people appear to be healthy, happy, and somewhat well-off. The message seems to be that the "American Way" is a comfortable way of life.

For many Americans living during the Great Depression, that billboard did not depict reality. In 1929, the stock market crashed, banks failed, farmers saw a drastic decline in crop prices, and personal debt was high. These realities caused the biggest economic catastrophe America has ever known, the Great Depression.

Some of the effects of the Great Depression included businesses closing and a drastic increase in unemployment and poverty. The crisis even spread globally. Take a look at how these effects were interconnected.

Consumer spending and investment dropped drastically. This occurred mainly because people lost a lot of money when banks failed and the stock market crashed, and businesses had to close. This cycle was vicious. Businesses failed, so people were laid off, which increased unemployment. This increase in unemployment led to less income, which caused less people to spend, which in turn led to more businesses closing.

When the American economy contracted, the United States stopped loaning money to Europe. Therefore, European businesses faced the same cycle of depression that the United States encountered.

Refer to the Depression Cycle below for a visual representation of this issue:

Americans did many things to try to deal with their economic realities. As you are investigating, take notes on what people did to try and cope:

• First, read Soup Kitchens in the Great Depression, from the Siteseen network.
• Next, listen to two short NPR StoryCorps podcasts, "My dad was working 24/7 to make it.", and, "We sold what household things we had..."
• Finally, watch Riding the Rails from Read180 Videos:

• What did you learn?

Discuss with your parent or teacher ways that people tried to cope during the Great Depression.

Much of these hardships were caused by unemployment. In 1933, those rates were higher than they had ever been, and they have not been that high since (as of 2017).

Take a look at the unemployment rates then and now in the Got It? section.