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Did The Prosperity Of The 20

′S Lead To The Depression Essay, Research Paper


Did the Prosperity of the 1920’s


Cause the Depression ?


In my opinion, I think that the prosperity of the 1920 s did partly cause the Great Depression. I feel this is true because, although the 1920s appeared to be a time of great prosperity, in fact, it was a time of many weaknesses in the world economy. The apparent wealth was unevenly distributed. The wealthy, the captains of industry made huge profits on things like railroads and oil, but the rest of the people, caught up in the atmosphere of prosperity, spent more than they earned. Farmers in particular faced heavy debt, and after World War I were unable to make a profit. In Europe, the economy was having a hard time recovering from World War I, and the countries as well as the people ran up huge debts.


I think that both the crash of 1929 and the depression were the effects of the instability of the economy of the 1920s. Americans after the war were no longer concerned for international issues, and instead concentrated on getting rich, enjoying themselves, and taking advantage of the new fads and inventions of the twenties, like the car and the radio. The traditional rural values began to fall out of favor, and instead, people became more self-centered, non-religious and cocky about their prosperity. This new confidence fit well with the economy of the twenties. The modern industries had develo

ped methods, like the assembly line, to build huge numbers of products, and the companies needed to develop markets for this abundance of goods. Prosperity could continue only if people could be persuaded to give up old habits like saving and postponing their pleasures, and instead be induced to buy things, whether they could afford them or not. Advertising boomed, and people all believed that they needed such things as cars, radios and household appliances.


Consumer credit was another innovation of the 1920s. People were encouraged to buy the new consumer goods on credit, and inevitably the day came when they could not buy any more and could not pay for the things they had already bought. That day came in 1929.


Mass consumption kept the economy going through most of the twenties. This economy was not well balanced though. While corporations made huge profits, the workers were paid comparatively little, and the gulf between the richest and poorest grew steadily. The income tax structure also encouraged wealth formation: tax cuts for the rich people allowed them to keep most of the money they made, while providing little or none for social services for the poor or the farmers.


This is why I think that the prosperity of the 1920s did inevitably lead to the great Depression, because it was a false prosperity, and actually most people were not a prosperous as they thought. They had the possessions, but not the wealth.

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