H1302_1

1

The Great Depression: Causes and Lived Experiences

Johnnie Holloway

University of Houston: Online Asynchronous

HIST 1302

Professor Mizelle

October 19, 2025

2

The Great Depression: Causes and Lived Experiences

One of the most terrible economic tragedies in American history was the Great

Depression that began in 1929 and continued most during the 1930s. Although the Stock Market

Crash of October 1929 can be considered the event that led to the Depression, the reasons were

much deeper and more complicated, and they were built over several decades. Depression

transformed American life, and millions of people remained jobless, homeless, and desperate. To

comprehend its effect, one has to consider two primary causes: the crashing of the banking

system and the purchasing power loss, as well as look at two examples of lived experience in this

period: life in Hoovervilles and the Dust Bowl migration.

The breakdown of the banking system was one of the reasons that led to the great

depression. Banks of the 1920s took dangerous loans and overinvested in the stock market. As

the market crashed, both individuals and institutions lost huge sums of money. Fear gripped the

country, and withdrawal of savings began, and bank failures were common. Most of the life

savings of millions of people were lost overnight in the absence of federal insurance (the FDIC

was not in existence until 1933). The breakdown of the banking system also rendered businesses

helpless since they could no longer get credit to settle workers or even make investments in

production. This increased mass layoffs, reduction in wages, and further economic contraction

(Romer, 2003). The collapse of financial institutions demonstrated the inconsistency of the

uncontrolled economy and showed how easily the panic could transform a recession into a full-

blown depression.

3

The other significant reason was the loss of purchasing power among the common

Americans. The income inequality grew exponentially in the 1920s as corporate profits

increased, and the wages of most workers remained stable. The people of America were not able

to buy goods produced, and this formed an unsustainable economic imbalance. With the increase

in unemployment following the crash, the consumer demand decreased even more. Factories

reduced their work or even closed down, and this further increased job losses, which is referred

to as the vicious circle of deflation. This particularly affected the farmers who had been facing

weak prices for their crops following World War I. With the prices of wheat, cotton, and corn

crashing down, a large number of people could no longer afford their debts, and they were

unable to retain their lands as they were foreclosed (U.S. History.org, 2023). The decline in

purchasing power in urban and rural America transformed a financial crisis into a depression.

The financial meltdown was truly disastrous to everyday living. A clear indication of the

lived experience during this era was the emergence of Hoovervilles, improvised shantytowns

named after President Herbert Hoover, whom many residents held responsible as the cause of the

crisis. In countries, the jobless constructed houses using scrap wood, tin, and cardboard, and

concentrated in the outskirts of the cities. Families in these communities were also able to share

what they had little of, scavenge, and survive on charity. Hoovervilles were a synonym of the

depression despair; however, they represented the strength and unity of the ordinary American

who struggled collectively(Romer, 2003).

The other experience that was defining experience was the Dust Bowl that struck the

Great Plains in the early 1930s. According to the lecture, The Dust Bowl, many years of extreme

drought and bad farming techniques wiped out millions of acres of farmland. The dry topsoil was

blown away by strong winds, and it formed huge dust storms that darkened the skies and buried

4

the homes. The farmers lost their livelihood, crops, and livestock. Families in the thousands (they

were known as Okies because of the former home state of Oklahoma) flocked to California in

search of employment. Some of them became migrant workers residing in tents or camping, and

were discriminated against and impoverished. Not only was the Dust Bowl an ecological

disaster, but also a human disaster, as economic and ecological disasters became one to overturn

whole communities. In conclusion, the great depression was provoked by profound structural

flaws in the American economy, especially the failure of the banking system and the massive

destruction of buying power. It had a tremendous human price, witnessed in the proliferation of

Hoovervilles and the misery of Dust Bowl migrants.

5

References

Romer, C. D. (2003). The Great Depression. Encyclopedia Britannica.

https://www.britannica.com/event/Great-Depression

U.S. History.org. (2023). The Great Depression. Independence Hall Association.

https://www.ushistory.org/us/48e.asp

1

The Great Depression: Causes and Lived Experiences

Johnnie Holloway

University of Houston: Online Asynchronous

HIST 1302

Professor Mizelle

October 19, 2025

2

The Great Depression: Causes and Lived Experiences

One of the most terrible economic tragedies in American history was the Great

Depression that began in 1929 and continued most during the 1930s. Although the Stock Market

Crash of October 1929 can be considered the event that led to the Depression, the reasons were

much deeper and more complicated, and they were built over several decades. Depression

transformed American life, and millions of people remained jobless, homeless, and desperate. To

comprehend its effect, one has to consider two primary causes: the crashing of the banking

system and the purchasing power loss, as well as look at two examples of lived experience in this

period: life in Hoovervilles and the Dust Bowl migration.

The breakdown of the banking system was one of the reasons that led to the great

depression. Banks of the 1920s took dangerous loans and overinvested in the stock market. As

the market crashed, both individuals and institutions lost huge sums of money. Fear gripped the

country, and withdrawal of savings began, and bank failures were common. Most of the life

savings of millions of people were lost overnight in the absence of federal insurance (the FDIC

was not in existence until 1933). The breakdown of the banking system also rendered businesses

helpless since they could no longer get credit to settle workers or even make investments in

production. This increased mass layoffs, reduction in wages, and further economic contraction

(Romer, 2003). The collapse of financial institutions demonstrated the inconsistency of the

uncontrolled economy and showed how easily the panic could transform a recession into a full-

blown depression.

3

The other significant reason was the loss of purchasing power among the common

Americans. The income inequality grew exponentially in the 1920s as corporate profits

increased, and the wages of most workers remained stable. The people of America were not able

to buy goods produced, and this formed an unsustainable economic imbalance. With the increase

in unemployment following the crash, the consumer demand decreased even more. Factories

reduced their work or even closed down, and this further increased job losses, which is referred

to as the vicious circle of deflation. This particularly affected the farmers who had been facing

weak prices for their crops following World War I. With the prices of wheat, cotton, and corn

crashing down, a large number of people could no longer afford their debts, and they were

unable to retain their lands as they were foreclosed (U.S. History.org, 2023). The decline in

purchasing power in urban and rural America transformed a financial crisis into a depression.

The financial meltdown was truly disastrous to everyday living. A clear indication of the

lived experience during this era was the emergence of Hoovervilles, improvised shantytowns

named after President Herbert Hoover, whom many residents held responsible as the cause of the

crisis. In countries, the jobless constructed houses using scrap wood, tin, and cardboard, and

concentrated in the outskirts of the cities. Families in these communities were also able to share

what they had little of, scavenge, and survive on charity. Hoovervilles were a synonym of the

depression despair; however, they represented the strength and unity of the ordinary American

who struggled collectively(Romer, 2003).

The other experience that was defining experience was the Dust Bowl that struck the

Great Plains in the early 1930s. According to the lecture, The Dust Bowl, many years of extreme

drought and bad farming techniques wiped out millions of acres of farmland. The dry topsoil was

blown away by strong winds, and it formed huge dust storms that darkened the skies and buried

4

the homes. The farmers lost their livelihood, crops, and livestock. Families in the thousands (they

were known as Okies because of the former home state of Oklahoma) flocked to California in

search of employment. Some of them became migrant workers residing in tents or camping, and

were discriminated against and impoverished. Not only was the Dust Bowl an ecological

disaster, but also a human disaster, as economic and ecological disasters became one to overturn

whole communities. In conclusion, the great depression was provoked by profound structural

flaws in the American economy, especially the failure of the banking system and the massive

destruction of buying power. It had a tremendous human price, witnessed in the proliferation of

Hoovervilles and the misery of Dust Bowl migrants.

5

References

Romer, C. D. (2003). The Great Depression. Encyclopedia Britannica.

https://www.britannica.com/event/Great-Depression

U.S. History.org. (2023). The Great Depression. Independence Hall Association.

https://www.ushistory.org/us/48e.asp