How It Rose
After the termination of World War I, the economy was in ruins. Labor Unions formed and constantly went on strikes to fight for higher wages, and better hours and working conditions. The largest strikes were the General Strike of All Seattle Workers and the Strike of the American Steel Industry. Labor Unions were one major factor that resulted in a short recession from 1920 - 1921, similar to the one that the United States is going through today. Herbert Hoover, the future president of the United States at the time, convinced big time industrial leaders to increase the salary of their workers as well as production of their products to catapult their economy out of recession.
The Treasury Secretary, Andrew Mellon, lowered the tax rate of the most affluent Americans from 73% to 25%. This allowed an overflow of money for the rich, which they invested in the stock market. As a result, the stock market skyrocketed, and Dow Jones rose to six times the price it was in 1921 during the late 1920s. Additionally, the wages of urban workers increased by 20% during this time, and mass production increased. Ford sold over fifteen million Model Ts in the 1920s, partially due to the fact that the car price decreased annually. Advertising developed during this time too, and companies began to sponsor products on radio shows.The Cinema business and radio industry developed during this time, and radio talk shows and sitcoms developed like Amos 'n Andy.
However while urban citizens prospered, farmers did not. During World War I, European countries were unable to produce their own agriculture, and depended upon the United States for their products. Europe's constant need for products allowed farmers to raise their prices on goods and gain more money At the end of the war, Europeans were able to begin their agricultural production once more and American farm products were no longer necessary. Farmers had extra crops that they did not know what to do with, and the prices plummeted. Wheat dropped by almost 50%, and cotton fell by 75%. Many farmers had previously obtained loans for new technologies like tractors, and were now in immense debt.
The Treasury Secretary, Andrew Mellon, lowered the tax rate of the most affluent Americans from 73% to 25%. This allowed an overflow of money for the rich, which they invested in the stock market. As a result, the stock market skyrocketed, and Dow Jones rose to six times the price it was in 1921 during the late 1920s. Additionally, the wages of urban workers increased by 20% during this time, and mass production increased. Ford sold over fifteen million Model Ts in the 1920s, partially due to the fact that the car price decreased annually. Advertising developed during this time too, and companies began to sponsor products on radio shows.The Cinema business and radio industry developed during this time, and radio talk shows and sitcoms developed like Amos 'n Andy.
However while urban citizens prospered, farmers did not. During World War I, European countries were unable to produce their own agriculture, and depended upon the United States for their products. Europe's constant need for products allowed farmers to raise their prices on goods and gain more money At the end of the war, Europeans were able to begin their agricultural production once more and American farm products were no longer necessary. Farmers had extra crops that they did not know what to do with, and the prices plummeted. Wheat dropped by almost 50%, and cotton fell by 75%. Many farmers had previously obtained loans for new technologies like tractors, and were now in immense debt.