Wishon
Erin​ ​Wishon
Ann​ ​Nagye
Econ.​ ​211
November​ ​24th,​ ​​ ​2017
​ ​The​ ​Great​ ​Depression​ ​of​ ​the​ ​1920’s
​ ​​ ​​ ​​ ​​ ​​ ​​ ​The​ ​​ ​Depression​ ​of​ ​the​ ​1920’s​ ​is​ ​not​ ​well​ ​known​ ​in​ ​today’s​ ​society.​ ​Most​ ​civilians
recall​ ​the​ ​Great​ ​Depression​ ​of​ ​the​ ​1930’s.​ ​But​ ​not​ ​everyone​ ​knows​ ​what​ ​led​ ​and​ ​caused
the​ ​Depression​ ​in​ ​1920.​ ​Economic​ ​growth​ ​was​ ​outstanding​ ​in​ ​the​ ​beginning.​ ​There​ ​was
a​ ​rapid​ ​growing​ ​demand​ ​of​ ​automobiles​ ​and​ ​suburbs​ ​were​ ​expanding.​ ​Because​ ​electric
networks​ ​were​ ​spreading​ ​across​ ​the​ ​country,​ ​the​ ​demand​ ​for​ ​appliances​ ​rose
dramatically.​ ​Recreational​ ​activities​ ​such​ ​as,​ ​traveling​ ​and​ ​sports,​ ​became​ ​major
businesses.​ ​Women​ ​also​ ​gained​ ​the​ ​right​ ​to​ ​vote​ ​in​ ​the​ ​1920’s​ ​and​ ​stock​ ​prices
increased.​ ​The​ ​economy​ ​grew​ ​a​ ​staggering​ ​42​ ​percent.​ ​But​ ​as​ ​all​ ​economies​ ​with​ ​time,
things​ ​will​ ​not​ ​always​ ​be​ ​thriving​ ​and​ ​that​ ​is​ ​when​ ​the​ ​economy​ ​started​ ​to​ ​shift.​ ​The
Depression​ ​of​ ​1920​ ​did​ ​in​ ​fact,​ ​lead​ ​to​ ​the​ ​Stock​ ​Market​ ​Crash​ ​in​ ​1929.​ ​Two
consecutive​ ​Depressions​ ​so​ ​close​ ​together​ ​did​ ​not​ ​serve​ ​the​ ​economy​ ​well.
​ ​​ ​​ ​​ ​​ ​​ ​There​ ​was​ ​a​ ​trigger​ ​that​ ​did​ ​start​ ​the​ ​decline​ ​in​ ​the​ ​economy​ ​and​ ​led​ ​to​ ​the​ ​disaster.
A​ ​big​ ​bang​ ​in​ ​the​ ​sales​ ​of​ ​stocks​ ​was​ ​one​ ​factor.​ ​World​ ​War​ ​1​ ​had​ ​just​ ​recently​ ​ended
when​ ​this​ ​crisis​ ​occurred.​ ​Post-World​ ​War​ ​1​ ​spending​ ​cuts,​ ​a​ ​hike​ ​in​ ​interest​ ​rates​ ​that
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reversed​ ​inflation,​ ​and​ ​supply​ ​side​ ​factors​ ​are​ ​believed​ ​to​ ​have​ ​caused​ ​the​ ​1920
Depression.​ ​Because​ ​the​ ​military​ ​spending​ ​was​ ​cut,​ ​in​ ​an​ ​attempt​ ​to​ ​slow​ ​down​ ​the
economy,​ ​the​ ​federal​ ​budget​ ​was​ ​reduced​ ​and​ ​this​ ​is​ ​one​ ​of​ ​the​ ​most​ ​possible
contributing​ ​factors​ ​that​ ​led​ ​to​ ​this​ ​Depression.​ ​Eventually,​ ​prices​ ​started​ ​to​ ​change,​ ​and
stocks​ ​were​ ​going​ ​down​ ​and​ ​wholesale​ ​prices​ ​were​ ​declining​ ​at​ ​a​ ​fast​ ​pace.​ ​There​ ​was
an​ ​estimated​ ​10​ ​percent​ ​decline​ ​in​ ​GDP​ ​and​ ​deflation​ ​was​ ​approximately​ ​between​ ​13​ ​to
14​ ​percent.​ ​Employment​ ​was​ ​also​ ​affected.​ ​Unemployment​ ​spiked​ ​from​ ​5​ ​percent​ ​to​ ​a
high​ ​of​ ​11​ ​percent.​ ​This​ ​particular​ ​depression​ ​was​ ​relatively​ ​short,​ ​lasting​ ​from​ ​January
1920​ ​to​ ​June​ ​of​ ​1921,​ ​starting​ ​14​ ​months​ ​after​ ​World​ ​War​ ​1.​ ​This​ ​was​ ​the​ ​time​ ​Warren
G.​ ​Harding​ ​also​ ​became​ ​President​ ​of​ ​the​ ​United​ ​States.​ ​Interest​ ​rates​ ​were​ ​also