The Great Depression

          The Great Depression was a time when the United States’ economy was almost nonexistent. The unemployment rate skyrocketed and people didn’t have enough money for many basic things. There are a lot of theories as to what caused the Great Depression, but the most common reason is the stock market crash of 1929. The stock market crash on October 29, 1929 caused stockholders to lose over $40 billion dollars, and the country just wasn’t able to regain that much money (Kelly). After the stockholders lost so much money, much of the country went into debt. To make it worse, since people feared that the economy would worsen, people stopped spending. That caused there to be very little money circulating in the economy. Even after the stock market slowly got better, it couldn’t make up for how much the people lost, causing for America’s economy to enter the Great Depression. Another common reason is the bank failures throughout the 1930s. Over 9,000 banks failed over the course of the 30s (Kelly). Since everyone’s deposits were uninsured, the people simply lost all of their savings. To make matters worse, the surviving banks, worried about their own survival, scarcely gave out loans. No loans combined with the stock market crash caused people to have no money, and with no money businesses couldn’t afford to pay workers, causing unemployment to rise. All of these events happening together caused the Great Depression that defined the 1930s.

           Not only did economic tragedies cause the Great Depression, the Great Depression caused many economic meltdowns and affected people’s personal lives heavily.  By the inauguration of President Roosevelt in 1933, the unemployment rate hovered close to 25% (“The Great Depression”). With unemployment so high, many people didn’t have the money to buy basic things, and if people aren’t buying things, no money is going back into the economy. With no money going back into the economy, it kept getting worse and worse. The Great Depression caused many families to get divorced too, because they couldn’t pay the legal fees. Eyewitnesstohistory.com said, “Families waited to get married, the divorce rate rose sharply, and for the first time in American history, birth rates dropped below the replacement level.” The fewer births was caused because many families didn’t want to pay for children and because of the high divorce rate. It was a rough time for America’s middle class.

          The Great Depression not only changed society back in the 30s, it has shaped the way banking is done today. After the banks failed, everyone with money in those bank lost all of their savings. To protect against that happening again, people today have deposit insurance. Deposit insurance is insurance you get so that if a bank fails, you get partial of full coverage on your deposit (livinghistory.org). In other words, you get your money back. The Great Depression caused people to be more careful with their money. The FDIC, of federal deposit insurance corporation, was created to help protect people’s money in the banks (livinghistory.org). The FDIC is what gives out deposit insurance and enforces the laws placed around it. The Great Depression shaped the banks are run today.