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Describe The Economic Factors Prevalent In The 1920s

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1) Describe the economic factors prevalent in the 1920s that led to the crash of 1929 and the Great Depression that followed. The economic structure of the United States following World War I led to a period of economic prosperity that led to a dramatic cultural shift in the United States of the “Roaring Twenties.” Industrial growth and consumerist attitudes changed America’s socioeconomic landscape in many ways during this time. Unfortunately, the economic success of this era eventually led to various political and economic missteps that preluded Black Tuesday and the beginning of the Great Depression. Five main economic factors: American credit structure, income inequality, lack of stock market diversification, U.S. approach to international …show more content…

Low industrial wages associated with mass production concentrated wealth in the hands of few business owners and industry magnates. They then saved this money for themselves rather than return it to the economy in the form of wages or reinvestment. Already struggling workers could not afford to keep up with the consumerist culture and had to borrow money to cover expenses. This kept even more money from circulating within the economy; eventually the number of available loans decreased as banks began to save the money they still possessed. Consequentially, debtors decreased their consumption to still lower levels, leading to reduced demand for products. This drove prices down, which decreased employment. Increased unemployment decreased consumption, creating a cycle that continued to weaken the structure of the U.S. economy. This cycle had massive effects on the economy, as reduced consumption diminished the monetary supply, leading to a decline in production levels and in GDP. Income inequality also related to issues with U.S. credit …show more content…

He addressed economic problems with varying degrees of severity, first tackling the banking crisis before implementing reform in public works programs and empowering laborers; these approaches were designed to support the economy on various fronts. Roosevelt’s strategy was to remain calm and flexible, as he wanted to find solutions that would best help economic restoration and provide an increased sense of security for all Americans. This flexible, multifaceted approach made FDR’s response to the economic crisis successful in helping America recover from the Great

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