The United States: From Prosperity to Crisis - The Roaring Twenties and the Wall Street Crash of 1929

The United States: From Prosperity to Crisis

The Roaring Twenties

Economic growth in the United States continued throughout the decade following the end of the war (1918-1929). It was the decade of prosperity, the Roaring Twenties, in which the American way of life and the values that underpinned it (initiative, individual effort and success), which guaranteed the wealth and wellbeing of its citizens, became a model for the whole world.

Economic growth was based on a comprehensive transformation of goods manufacturing processes, which were dominated by technical innovation. Taylorism and Fordism helped increase productivity and reduce costs. The rise in workers' wages, advertising campaigns, hire purchase (payment for something in regular amounts) and bank loans paved the way for an era of mass consumption.

This prosperity was reflected in a huge stock market boom. The profits from good business led to a rise in demand for shares, whose value rose steadily.

The Wall Street Crash of 1929

Many shareholders knew that the prices of shares were much higher than their real value. Mistrust spread among investors, and on 24 October 1929 (Black Thursday), a huge selling wave hit the New York Stock Exchange. Suddenly, everyone wanted to sell their shares and no one wanted to buy them. Their value plummeted and triggered the Wall Street Crash (the Stock Market Crash) of 1929.

Many investors were ruined and panic spread among the citizens, who flocked to the banks to withdraw their money. The banks were forced to close due to a lack of funds, since they could not collect loans provided to individuals and insolvent businesses. The Wall Street Crash led to the failure of many banks.

In a few years, the crisis affected many industries, trade and agriculture, causing a widespread economic recession (the Great Depression). As unemployment increased, consumption declined and many factories closed, as they could not sell their products. Unemployment rose to 13 million in 1932. Many families fell into poverty.