The Roaring Twenties: Economic Boom, Crash, and Recovery

The Roaring Twenties

It was the decade of prosperity, the Roaring Twenties, in which the American way of life and the values that underpinned it became a model for the whole world. Economic growth was based on a comprehensive transformation of goods manufacturing processes.

• Taylorism and Fordism: Increased productivity and reduced costs.
• Mass Consumption: Rise in workers' wages, advertising campaigns, hire purchase, and bank loans.
• Stock Market: This prosperity was reflected in a huge stock market boom.

The Paradox of Prosperity

A series of events between 1926 and 1927 led to a crisis:

• Agricultural Decline: Agricultural prices increased less rapidly than industrial prices; many farmers realized that the market could not absorb all their production.
• Overproduction: Stock accumulated, prices fell, and many farmers lost everything they owned.
• Stagnation: Traditional industries stagnated, and entire regions missed out on modernization, making overproduction a major problem for the US economy.

The Wall Street Crash of 1929

• The Crash: On 24 October 1929, a huge selling wave hit the New York Stock Exchange. Everyone wanted to sell their shares, and no one wanted to buy them. Their value plummeted, triggering the Wall Street Crash of 1929.
• Banking Crisis: Many investors were ruined, and citizens flocked to banks to withdraw their money. Banks were forced to close due to a lack of funds, leading to widespread failure.
• The Great Depression: The crisis affected many industries, trade, and agriculture, resulting in a widespread economic recession. Consumption declined, and unemployment rose to 13 million.

The Fight Against the Crisis: The New Deal

Franklin D. Roosevelt introduced the New Deal, a series of political programs based on the ideas of economist J. M. Keynes, who advocated for state intervention in the economy.

Main Areas of Action

• Economic: The government helped private companies in difficulty, created public companies in sectors without incentives for private investment, ordered agricultural stock to be destroyed, and established stricter control over banks.
• Social: The state promoted a major public works program, encouraged companies to increase wages, and reduced the working week to 40 hours.