Kelly Cai
Professor Chocos
ESL 100D&E
Great Depression In 1920’s
Nowadays, the United States leads the world economy, but the
problems of economy appeared at beginning of 1920’s. The Jazz Age
describes the period after the end of WWI, through the Roaring Twenties,
ending with the onset of the Great Depression. The Great Depression began
not in 1929 but in 1920, and it continued for an entire generation. Economic
growth in the 1920s was impressive. For most of people, the American
economy has reached unprecedented development level in this year.
Beginning in the United States, the depression spread to most of the world’s
industrial countries, which in the 20th century had become economically
dependent on one another. At that time, a large number of university graduates
cannot find a job. There are suddenly unemployed middle-aged men with
helpless expression who squeeze lives. There is a funny saying to describe
that period: “ Mellon pulled the whistle, Hoover rang the bell, Wall Street gave
the signal and the country went to hell.” After search in the “Healey library”
about “The Great Depression In 1920’s For United States”, as results indicates
the main causes because of the economic policy, bubble economy and
cultural.
The American government had been pursuing and taking the laissez-faire
economic policy, which was the main reason of exacerbating the great
depression. The 1920s were not kind to labor unions even though the First
World War had solidified the dominance of the American Federation of Labor
among labor unions in the United States. The rapid growth in union
membership fostered by federal government policies during the war ended in
1919. During the 1920s the Republican governments favored a laissez-faire
approach. Therefore, the president Calvin Coolidge was the 30th President of
the United States for Republican Party. One of the main initiatives of both the
Harding and Coolidge administrations was the rolling back of income taxes on
the wealthy, which had been raised during World War I. The Republicans in
Congress shared Coolidge’s ideas, and in 1924 Congress passed the
Revenue Act of 1924, which reduced income tax rates and eliminated all
income taxation for some two million people. In addition to these tax cuts,
Coolidge proposed reductions in federal expenditures and retiring some of the
federal debt. This helped the United States to accumulate wealth. By 1927,
only the richest 2% of taxpayers paid any federal income tax. After during the
Coolidge's administration, allowing one-fourth of the federal debt to be retired,
state and local governments saw considerable growth, surpassing the federal
budget in 1927. This policy led to American economic level has been
significantly improved, but rapid growth of the market economy has become
the "boom" of the Coolidge years.
The stock market crash was the direct cause of the great depression.
The booming economy and widespread advertising, led to a shift in
consumer attitudes. This encouraged greater spending through credit.
This also extended to the stock market. The performance of the stock
market seemed to create an easy way to make money. This encouraged
more speculators to enter. However, share prices became divorced from
reality. It was a classic boom and bust in market sentiment. “The wall
street crash of October 1929 reversed these historic roles: the plague of
the Great Depression began in the United States and spread to other
lands,” from “ The Great Depression” by William E. Leuchtenburg. The
stock market was almost controlling economy, when this rapid fall quickly
swept American financial institutions, then across to all economic sectors,
made the entire economy. The disease took a far more violent form in the
United States than in other countries. In particular, did not reach the
appalling levels of joblessness in America. The Leuchtenburg says, “While
net industrial output fell 47 per cent in the United States from 1929 to 1932,
it dropped only 31 per cent in France, 16 per cent in the United Kingdom,
4 per cent in Japan.” That is shows of the decline in industrial production
throughout the world, more than half took place in the United States.
Finally, Americans realized that they were caught in Europe's
predicament.
In 1920, nearly half the nation's population still resided in rural areas,
dependent upon agriculture for survival from “The American heritage history of
the 1920’s and 1930’s.” And the great depression was unkind to America's
farmers. However, the prosperity of the 1920s was not universal. The decade
began with the end of a period of great prosperity. After World War I, by
disrupting the agricultural production of much of Europe, had created
enormous demand and high prices for farm products throughout the world.
Therefore, the war's end allowed the resumption of normal European
production, and suddenly the world faced a huge glut of agricultural products,
with no market of buyers. From 1920 to 1921, farm prices fell at a catastrophic
rate. Because no one to buy, they put the overproduction of milk and throw
them into the Mississippi River. This led to a record number of farmers going
bankrupt. It also led to shifts in the population from rural to urban areas, but the
roaring prosperity of America's cities during the 1920s made the privation of
rural life all the more painful.
Financial stability is the cornerstone of the healthy development of
the economic. The United States government seized the opportunity, the
policy change. Let the United States has accumulated enough money in
WWI. Fast growth let the Americans get carried away. Ignore the most
important question in 1920 villages have been the economic crisis. Urban
America only began to share the pain long felt in the countryside late in
1929, when the stock market crash suddenly caused billions of dollars in
assets to evaporate. While the Great Crash itself directly affected only the
tiny minority of affluent Americans who owned stock at the time, ensuing
cutbacks in industrial production caused a nationwide economic downturn
unprecedented in its depth and length. The descent from the Roaring
Twenties into the Great Depression was steep.
Sources
Andrew William Mellon（Warren Gamaliel Harding29，John Calvin Coolidge
Jr.30，Herbert Clark Hoover31）
http://www.whitehouse.gov/about/presidents/calvincoolidge
Barry, John M. (1997). Rising Tide: The Great Mississippi Flood of 1927
and How It Changed America. Simon & Schuster.
“ The Great Depression” by William E. Leuchtenburg
http://www.historylearningsite.co.uk/America_economy_1920s.htm
The American heritage history of the 1920’s and 1930’s by the editors of
American heritage
Great Depression by David F. Burg.