The Great Depression, the worst economic low in America’s history, marked the end of a period that was known as being happy for all. The “Roaring 20’s” as they are often referred to, were a cultural transition in America. After the first World War, Americans celebrated by buying things they couldn’t afford, and investing in stocks (two things that often went hand in hand). During this time period, however, the rich got richer and the poor got poorer. This wage gap is not the only economic issue that can be seen in this period. The American people were relying heavily upon credit, and businesses were busy producing too many goods. The Great Depression is the result of many occurrences that weakened the economy in different ways, the three main …show more content…
The purchase of a stock with hopes that the value will increase but not actually knowing it will is known as speculation, this combined with the heavy use of installment buying caused many people to fall into extreme debt, creating an unstable economy and leading to the Great Depression. Since it was no longer seen as shameful to be in debt, the American people were now taking advantage of credit and installment buying (Document 6). People wanted to maintain this new standard of living and did so by amassing large amounts of debt through this buy now, pay later system. This acceptable economic prices, combined with the speculative purchase of stocks led to a detrimental economic downfall. The prices of stock were driven up based on this speculation instead of any increase in the profits of the business (Document 5). People were being persuaded into buying stock on all fronts. It was seen as “cool” to own stock …show more content…
The majority of the population in America was below the poverty line, unable to afford anything except for the absolute bare minimum. As of 1929, 32% of American families were earning between $2,000 and $5,000 while only 2% were earning over $10,000 a year. This extreme gap between the rich and the poor was a result of business owners not increasing wages even when profits were increasing. A boat ad produced in 1930 further emphasizes the wage gap. Advertised as “affordable” these boats are still too expensive for the average American (Document 8). This gap can account for the decrease in demand for goods because a majority of the population was too poor to afford enough food to feed their families, they certainly could not afford the luxurious items that had been associated with the 20’s. People were barely making enough to survive, as seen in the first hand account from a mother who brings home $9.95 a week. The family detailed in this account makes a total of $22.80 a week with two people working full time jobs (Document 7). When a majority of Americans can barely afford to live, they won’t be able to feed the economy which can, and did, lead to the Great