1920s Economy Essay

The economy in the United States over most of the 1920s was revolutionary for everyday men and women. It brought about a sense of economic prosperity that many had never seen before in their lifetimes. This sense of prosperity came about from several primary sources: America’s economy becoming business-centric, technological improvement, wage increases, and the creation of several new industries. Despite the common misconception that the economy was always “roaring” throughout the 1920s, the United States experienced a terrible post-war recession during the first two years of the decade (771, GML). It was not until the new industries of aviation, electronics, and automobiles arose that the economy bounced back and began to boom (771, GML).

Especially, considering the aforementioned wage increases that many received. By the latter part of the 1920s, almost half of America owned cars (771, GML). This extensive automobile ownership helped even further strengthen the U.S economy, as markets for oil, iron, and road construction were also stimulated through it (Cars used oil as a fuel source during the time and were built with mostly iron) (771, GML). Similarly, with the increase in consumers for telephones and other electrical appliances, companies like General Electric behind the leadership of Owen D. Young, established mass electrification networks for urban areas and roadways, which was at the time another luxury for most middle-class families. With the creation of these electrical systems, almost everyone had power and electricity in the U.S, except people in very rural areas, who were nearly all farmers (Young would later help to electrify farms too in the

Even with the drastic wage increases for many workers in the 1920s, wealth was still heavily concentrated in the “pockets” of the nation’s elitists (ex. Industry leaders). These elitists invested absurd amounts of their money into the New York Stock Exchange. Sometimes, even more money than they actually had. They could do this by borrowing on margin (a type of loan), something which if done often, can make a market have a high volatility (more dramatic price swings, in short periods). With more and more stocks being purchased on margin, the market became even more unstable. In 1929, the “bubble” finally burst, and the worst recession in American history began. Soon after the start of the Great Depression, factories shut down, farms foreclosed, unemployment rates skyrocketed, and even some banks went out of business (people could no longer pay back banks for things brought with credit). In this time of great struggle, many Americans turned to Republican President Herbert Hoover and his administration to help rejuvenate the