The end of prosperity

The end of prosperity

The Roaring Twenties

  • The period of the 1920s was often referred to as the Roaring Twenties, as it represented a time of significant prosperity and economic growth in the USA.
  • This era was characterised by an economic boom, driven by new sectors such as automobiles, radios, and movies.
  • The idea of the American Dream was particularly strong during this period, with many individuals seeing significant improvements in their living standards.

Causes of the Economic Boom

  • Key factors contributing to the boom included technological advancements, increased consumer spending, easy credit, and the government’s laissez-faire policy.
  • The Trickle-Down Theory, where wealth from the rich would eventually benefit the lower-income groups, was widely accepted.
  • The mass production techniques introduced by Henry Ford played a significant role in reducing production costs and increasing factory outputs.

Weaknesses in the Economy

  • Despite the economic prosperity, not all people or regions benefited equally. Farmers, for example, were suffering from overproduction and falling prices.
  • The wealth was not evenly distributed. The rich got richer while a significant number of Americans remained poor.
  • The easy availability of credit led to a culture of over-borrowing and over-spending, creating an unstable economy.
  • The US economy was also heavily dependent on a few key industries. A downturn in these sectors could have far-reaching effects.

The Wall Street Crash and the Great Depression

  • On October 24, 1929, known as Black Thursday, the American stock market crashed. This marked the beginning of the Great Depression.
  • The crash was a consequence of a variety of factors, including over-speculation in stocks, overproduction of goods, uneven distribution of wealth, and excessive use of credit.
  • The impact of the crash was disastrous, with banks failing, businesses closing, unemployment rates skyrocketing, and millions of Americans being plunged into poverty.
  • The economic downturn lasted throughout the 1930s and represented the end of the economic prosperity of the 1920s.

Responses to the Great Depression

  • The initial government response to the crisis was inadequate and often ineffective. President Hoover’s policies were seen as too little, too late.
  • The Election of 1932 brought Franklin D. Roosevelt to power, introducing a period of significant change known as the New Deal.
  • The New Deal policies aimed to Relief, Recover, and Reform the American economy.
  • Although the effects of these efforts were mixed, they marked a significant shift in the government’s role in managing the economy and supporting its people.