What was the Great Depression, and what effects did it have?

This is a big question, and like a lot of big questions it
is fairly complex in terms of giving an answer.  I am going to guess that you are
interested in a general overview, and because you posted it originally in the
"literature" category that the question is related to a book you are reading and
therefore you don't need to know all the gory details but just the greatest
hits.

The "Great Depression" (as it is now known) generally
started in 1929.  It is known as "great" not because it was awesome but because it was
so big.  Indeed, it affected many parts of the world in negative ways and lasted up
until World War II.

To make a long story manageable, the
"Great Depression" was a period of economic history where productivity went down,
markets collapsed, and unemployment skyrocketed.  It is similar to what America has been
experiencing for the last few years, but on a much more horrible scale (that's why ours
is simply the "Great Recession.")

There are different
explanations as to why the economy tanked at the end of the 1920's.  At the heart of it
was a big drop in the money supply caused by both people and governmental policy.  There
was a stock market "crash" in 1929 (known as Black Friday) that wiped out the fortunes
of many people, a good number of whom had borrowed the money that they'd used to invest
in the first place.  Within a year the market had begun to reverse itself, but people
were still wary of spending money and chose to keep it or pay off
debt.

The problem with this (as you hear people talking
about even in our situation now) was that people spent less money and so there was a
drop in demand for products. When demand goes down, you don't need as many workers to
make things so you lay them off.  Those laid off people don't spend money, so demand
goes down more.  It becomes a terrible cycle. Prices drop, a phenomenon known as
deflation, and though it sounds like a good thing it really
depresses everybody.  Wages go down, property values go down, and profits go
down.

The government made things worse at the time, at
least initially.  This is another one that ties in with today.  Conventional wisdom is
that when the economy starts to slow and "deflate" the government should step in and
spend money like a shot of adrenaline to a misfiring heart.  During the Great
Depression, though, the government didn't do this.

Added to
this was an awful drought known as "The Dust Bowl" (people back then liked to think of
clever names, didn't they?)  This destroyed a great deal of farmland and left many
farmers broke and homeless.  Unfortunately, there were no jobs in the city available and
they mostly slipped into grueling poverty.

As for
consequences, imagine this: You buy a house for $10,000.  You make $1 an hour.  Because
of deflation, your house is now worth $7,000 and you make .60 an hour.  Sill, you are
paying on the original $10,000 you borrowed.  You are worse off, even though things have
gotten cheaper.

So there you have it.  Depression caused by
a collapse of the monetary system coupled with supply and demand problems.  The result
was poverty, unemployment, and misery.  There's more to it, but that's the gist in a
nutshell.