Economic Prosperity in the 1920s

General Overview

• The 1920s was a decade of economic prosperity in the United States.
• The number of millionaires increased significantly.
• The general public was optimistic about the economy.

Factors Contributing to Economic Growth

Government Policies

• The federal government lifted many economic regulations.
• President Warren Harding, elected in 1920, advocated for a "RETURN TO NORMALCY."
  • This involved eliminating antitrust laws and business regulations from the Progressive Era and WWI.
• Corporations and banks operated without federal oversight, leading to short-term growth.

Consumer Culture

• Emergence of a new consumer culture with mass-produced affordable products.
• Henry Ford's assembly line for Model T production revolutionized industry.
• Other products like washing machines, vacuum cleaners, and electric stoves became common.
• Increased disposable income due to higher wages.
• Mass advertising encouraged consumer spending.
• Generous credit offerings from banks and companies promoted a "buy now, pay later" mentality.
• Rise in consumer debt as a result of credit reliance.

Warning Signs of Economic Problems

Wealth Distribution

• Despite economic growth, wealth was unevenly distributed.
• The number of millionaires increased, but they represented a small segment of the population.

Agricultural Sector Issues

• Farmers faced a crisis with increased production but decreased profits.
• Surplus in agricultural supplies led to lower food prices.
• Many farmers were in debt to banks, exacerbating their financial problems.

Consumer Debt and Overproduction

• Over-reliance on credit led to significant consumer debt.
• Illusion of continued consumer purchasing led to overproduction of goods.
• Overproduction resulted in decreased profits for manufacturers.

Stock Market Speculation

• Widespread speculation in the stock market was common.
• Buying stocks on margin was a prevalent practice.
• Banks gambled investor savings in the stock market.
• A stock market bubble formed during the 1920s.

The Crash of 1929

• The stock market bubble burst in October 1929.
• The crash led to the Great Depression, lasting throughout the subsequent decade.