Economic problems in the 1920s

Economic Prosperity

The 1920s, often called the Roaring Twenties, were characterised by apparent economic success and prosperity across most sectors of the United States economy.
Key contributors to this prosperity included the mass production of consumer goods, like automobiles and electrical appliances, improved transportation infrastructure, and widespread investment in the stock market.
New products and advances in technology spurred growth; for instance, the automobile industry grew rapidly, with the Model T released by the Ford Motor Company famed for its affordability for the average American.
A credit boom took place, with many buying expensive goods on easy payment plans, thereby spurring economic growth.

Economic Inequality and Rural Struggles

However, the 1920s were a decade of severe economic inequality. The wealthiest 1% of Americans owned over a third of the nation’s wealth, with the wealth gap between the rich and poor significantly widening.
This prosperity was not shared equally. While urban and industrial areas experienced growth, rural areas did not. Farmers suffered from overproduction of crops, leading to a serious decrease in prices; many found themselves in debt and lost their land.
The South of the United States did not share in the economic boom; cotton prices remained low and the boll weevil infestation harmed the crops, leading to increased levels of poverty and economic issues in the region.

Stock Market Crash and the Great Depression

The prosperity of the 1920s also led to the development of a speculative bubble in the stock market, where many Americans heavily invested, often borrowing money to purchase stocks.
The bubble burst on 29th October 1929 – “Black Tuesday” - which marked the start of the Great Depression and caused panic on the Wall Street.
The Wall Street Crash resulted in the loss of billions of dollars, with many businesses going bankrupt and millions of Americans unemployed.
The depression lasted for much of the 1930s, contributing to major economic and social changes in the US, and was brought under control through government intervention, notably the New Deal policies of President Franklin Roosevelt.