The 1920’s in America
The 1920’s was a very prosperous period for many Americans. Food production increased 64 percent, worker productivity increased by 40 percent, electricity sales doubled, fuel consumption more than doubled, and pay was increased for many industrial workers (Davidson, 2008). With the soaring economy and new items hitting the shelves all the time, American consumers were living the high life. Even if you wanted something and did not have the money you could simply get it on credit and pay for it later. After all, the economy was showing signs of immense economic prosperity with productivity at an all time high what could go wrong. Construction soared with the building of new skyscrapers, suburbs, and road construction. The automobile became cheap enough for almost any average family to afford. “Traffic jammed the nation’s highways and created a need for gas stations, roadside restaurants, tire manufacturers, and other businesses” (Roaring Twenties, 2011). The New York Stock Exchange’s “rising share prices encouraged many people to…buy shares in hope of making large profits following future price increases” (Mitchener, 2011). However, despite the booming prosperity of technology, consumer spending, economic growth, and a complete change of culture, there were still many that did not share the prosperity of others. “Prices of farm products fell by about 40 percent in 1920 and 1921” (Mitchener, 2011) which caused farmers to have to borrow a lot of money from the banks to keep their farms going. When farmers could not pay their debts they either had to move or rent their homes from the banks. Many of these banks went out of business from 1921 to 1929. Americans had no idea that their booming economy was about to come tumbling down around them.
The Stock Market Crash of 1929
No one was prepared for the events of the late twenties as the economy began to take a turn for the worst. “In 1928 and 1929 the Federal Reserve System raised interest rates in an effort to slow the market speculation” which led to a reduction of spending (Mitchener, 2011). The share prices began to drop rapidly which left many people uneasy about their stocks and on October 29, 1929 nervous shareholders sold 16,410,030 shares causing the stock market crashed. The estimated loss of around forty billion dollars left the United States in a state of panic. Millions of Americans had invested both small and lager sums of money into stock. The fortunes of the wealthy were destroyed and the savings of the average American were lost. America’s prosperity of the 1920’s had come to an abrupt halt. Millions had lost so much money that banks began to fail taking people’s savings with them, forcing factories to close, and bankruptcies swept the nation. “By 1932, U.S. manufacturing output had fallen to 54 percent of its 1929 level, and unemployment had risen to between 12 and 15 million workers” (Nelson). The Great Depression was now gripping the nation.