Immediately after World War I, America went through an economic downturn but quickly recovered. In fact, Americans had never had so much money or so much free time. New advances in technology meant that products could be made more quickly and cheaply than ever before. In 1927, the U.S. dollar was worth one-third more than it had been worth in 1914.

Fun Facts

• Working class families could now afford to buy vacuums, furniture, and other household goods.
• People began wanting and expecting more. Henry Ford introduced the idea of credit – a person could make a small down payment for a car and make payments each month until the car was paid for. Soon, people were using credit to buy furniture, appliances, and houses. This system allowed people to buy more things that they could if they paid in cash.
• Women had gone to work during the war. Many of them went back to being homemakers, but about 25 percent remained in the workforce.
• People felt optimistic that the good times would last forever, but by the late 1920s, problems in the economy began to appear. Few people paid attention to the warning signs.
• Not everyone enjoyed the new prosperity. As land prices increased and food prices decreased, farmers struggled. Many of them had purchased farm machinery on credit, but couldn’t pay off their debts. Over 13 million acres of farmland were left vacant as farmers moved to cities to find work.
• Advertisers began aggressively selling products and people kept spending money. More and more Americans carried debt. This debt made it difficult for them to save money. If something happened, such as a health problem or a job loss, they would be in serious trouble.
• People began investing in the stock market, sometimes buying “on margin,” which was like taking a loan from a stockbroker to buy a stock.

Vocabulary

1. Vacant: empty
2. Stockbroker: someone who buys and sells stocks on behalf of a client
3. Debt: money that is owed to someone else

Questions and Answers

Question: What would happen if people had bought everything they needed?

Answer: That’s exactly what did happen. Americans had purchased all the furniture, appliances, and home goods they needed, but factories kept on making more items. Soon these items began piling up. Factories weren’t selling goods so they weren’t making money. When they didn’t make money, they couldn’t pay their employees. When the employees were laid off, they couldn’t pay back their debts.

Learn More

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