Answer:
Why should students learn about the Great Depression? Our grandparents and great-grandparents lived
through these tough times, but you may think that you should focus on more recent episodes in American life. In this essay, I hope to convince you that the Great Depression is worthy of your interest and
deserves attention in economics, social studies and history courses.
One reason to study the Great Depression is that it was by far the worst economic catastrophe of the
20th century and, perhaps, the worst in our nation’s history. Between 1929 and 1933, the quantity of
goods and services produced in the United States fell by one-third, the unemployment rate soared to
25 percent of the labor force, the stock market lost 80 percent of its value and some 7,000 banks failed.
At the store, the price of chicken fell from 38 cents a pound to 12 cents, the price of eggs dropped from
50 cents a dozen to just over 13 cents, and the price of gasoline fell from 10 cents a gallon to less than a
nickel. Still, many families went hungry, and few could afford to own a car.
Another reason to study the Great Depression is that the sheer magnitude of the economic collapse—
and the fact that it involved every aspect of our economy and every region of our country—makes this
event a great vehicle for teaching important economic concepts. You can learn about inflation and deflation, Gross Domestic Product (GDP), and unemployment by comparing the Depression with more recent
experiences. Further, the Great Depression shows the important roles that money, banks, and the stock
market play in our economy.
A third reason to study the Great Depression is that it dramatically changed the role of government,
especially the federal government, in our nation’s economy. Before the Great Depression, federal government spending accounted for less than 3 percent of GDP. By 1939, federal outlays exceeded 10 percent
of GDP.
(At present, federal spending accounts for about 20 percent of GDP.) The Great Depression also
brought us the Federal Deposit Insurance Corp. (FDIC), the regulation of securities markets, the birth of the
Social Security System and the first national minimum wage.