The Roaring Twenties Come to A Grinding Halt
The decade of the 20’s was a time of innovation and change. America was prospering economically and the future of the country looked bright. As time moved on however, America saw a quite different fate. The Great Depression struck shortly after the Wall Street Crash in October of 1929. Many people view the stock market crash as the direct cause of the depression, but there were many other factors that played important roles towards the economic crisis America faced in the 1930’s.
Overproduction, consumer behavior, and government policies resulted in economic failure during the 30’s.
Overproduction of manufactured goods was a key contributor to the depression. Between 1923 and 1929, worker’s output increased by 32 percent. New technology allowed people to be more productive in the workplace. Stores and warehouses were overstocked with goods. While production increased exponentially, workers wages stayed the same. Expendable income wasn’t available to purchase the mass goods being created. Companies were unable to stay afloat because no one was able to buy their products. Overproduction was not confined to industrial manufacturing. American farmers were producing more food than the population was consuming. During World War I, farmers had increased their production to aid the war effort. Techniques to increase production improved output, but came at a high cost. Farmers were put into debt. This coupled with drops in land prices forced many farmers into unemployment.
Although consumers had little money to buy products, they still found a way to buy cars, washing machines, and other appliances through credit. People could put a down payment on products and pay the rest over time. Installment buying worked well until buyers lost their jobs. Consumers also gained interest in stock speculation. Speculation in stock refers to buying stock with the assumption that it can be sold for a profit. Businesses needed stock...