Explaining the Great Depression to a Fifth Grader_Stein

Dear Johnny,

Back in the 1920’s people were spending a lot of money on a bunch of different things. But, people didn’t always have the money to buy everything that they wanted. So they would buy it on credit instead of with cash. Using credit is like borrowing something and giving the person money for it later. Unfortunately a lot of people were never able to pay, so the original owner wanted the stuff back. But most of the time they couldn’t give it back so they owed them that item and fell into what’s called debt. At this time people were buying things called stocks. Which are very small piece of big companies that people can own and sell again.

People called brokers would give regular people money to buy stocks. If the price of the stock went up, then people would sell it and make money and pay back the brokers. But, if the price went down the people would lose money. Even though they lost money they still had to pay the broker with whatever they had, and if they couldn’t pay the brokers would just take their stock and other things. When people didn’t have any money they had to stop buying things which hurt companies. When the companies couldn’t sell anything lots of them started to close and let go of their employees making a lot of people unemployed. Banks began to close because they owned stock in these companies and when the companies closed the stock became worthless and the banks and people lost their money. All of this is the Stock Market crash which was a major catalyst for the depression. A catalyst is like a spark that starts a fire. Also, people started getting paid a lot less because the companies were trying to stay in business.

Farms and others industries were also depressed. New kinds of machines could do the jobs better than people, so the people were laid off. These machines made a lot more stuff a lot faster. But since nobody had money they couldn’t buy what the machines were making. The problem was the machines cost a lot of money to buy so when they didn’t make money the farms and industries had to close. Also, since rich people had all the power and were greedy, they became richer. While poor people didn’t get any more money than they had before. Since so many companies had closed there was nothing for other countries to buy. Also, so many people had lost their jobs or made less money they couldn’t buy stuff from other countries hurting them. Finally since not very many people were making money they couldn’t pay for their homes and became homeless.




personEngland, Arbeitslose vor Gewerkschaftshaus