4 March 2014
Economic Crisis During the twentieth century the United States was in economic turmoil. The First World War had just ended and the upcoming crisis was hidden in short-lived prosperity. The market was on the rise for common household goods in America as well as in European nations greatly affected by the war. However, the American government continued to spend money they did not have and had to face the consequences: inflation. Within the course of one year, prices rose more than fifteen percent. There was no longer a need for goods and the gross national product declined ten percent. Thousands of businesses went bankrupt, farmers lost their land, and 5 million Americans were without work. Times were bad as they faced a recession. When the recession ended in 1922, the United States fell right back into the brighter days of prosperity and economic progress. The manufacturing output rose to over sixty percent and per capita income increased by a third. There was a brief regress to the hard times but in 1924 the American economy seemed better than ever and continued for years to come (634). There were many reasons to the economic progress, one of which was the growing weakness in the European industry since WWI. The automobile industry was thriving and the U.S. was the only stable industrial power in the world (634). Steel, rubber, glass, and tool companies also benefited because the resources were used in the manufacturing of the automobiles. The growth of the automobile industry sparked growth in other industries such as road construction in addition to housing. The sale of textiles did not prove to be as popular (635).
Agriculture along with industry had to make some changes in order to have a more productive business. Most change was technology related. Tractors started to run on internal combustion engines like automobiles and the number on farms in America quadrupled. Farmers could easily cultivate land and less workers were needed (639).Production increased not only in the United States but in other parts of the world as well. The technological advances sped up production so much it passed the demand which resulted in surpluses. Food prices had to be dropped in addition to the farmer’s income still in the early 1920’s. The aftermath included 3 million leaving agriculture and the remaining farmers losing land. Some went to the bank and others went to landlords to rent land (640) Farmers demanded support that never came.
In 1929, an unexpected economic decline began and by October 29th the stock market crashed. Sixteen million shares of stock were traded and many stocks became worthless. The market was weak for over four years and this was the start of America’s big crisis (660). There were only a limited number of profitable industries, people struggled to buy goods, and banks were in trouble (660). Europe became more productive and with America’s high tariffs the demand for American goods diminished. Europe could not afford foreign goods or to repay American banks. The reparation payments agreed on by the allies from Austria and Germany were believed to be a solution to part of their problems but all countries were facing economic troubles at the same time and no one was paid.
While other countries attempted to fix their economic troubles America refused to decrease debts owed. Instead, under the Dawes plan American