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Consumerism

Consumerism in the 1920s encouraged Americans to buy products they did not need in large quantities. This was fueled by installment plans that allowed people to purchase goods and pay for them over time in small monthly payments. However, this led most Americans to live paycheck to paycheck with no savings. While high consumer spending masked economic troubles, it actually increased consumer debt and contributed to the Great Depression. The stock market crash of 1929 exacerbated this by causing bank failures that wiped out savings, high unemployment, and a severe economic downturn that marked the beginning of the Great Depression.

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28 views

Consumerism

Consumerism in the 1920s encouraged Americans to buy products they did not need in large quantities. This was fueled by installment plans that allowed people to purchase goods and pay for them over time in small monthly payments. However, this led most Americans to live paycheck to paycheck with no savings. While high consumer spending masked economic troubles, it actually increased consumer debt and contributed to the Great Depression. The stock market crash of 1929 exacerbated this by causing bank failures that wiped out savings, high unemployment, and a severe economic downturn that marked the beginning of the Great Depression.

Uploaded by

kyarphyuwendy790
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Consumerism:

Consumerism in the 1920's was the idea that Americans should continue to buy product and
goods in outrageous numbers. These people neither needed or could afford these products,
which generally caused them to live pay-check to pay-check. People bought many
quantities of products like automobiles, washing machines, sewing machines, and radios.
This massive purchasing period led to installment plans. These were plans for people in
which they were able to purchase their products and pay for them at a later time in small
monthly payments. This was the reason why "80% of Americans during the 1920's had no
savings at all - they were living pay-check to pay-check" (Textbook). This consumerism later
became a contributing factor to the start of the Great Depression because it greatly
increased the amount of consumer debt in America.

Photo of newspaper from the 1920s. News advised people to buy as much as they can because of the
"Invincible Stock Market". Evidence of consumerism and false prosperity during this time.

False Prosperity:
False Prosperity was the time where the economy was believed to be thriving, however, it
was really suffering. As a result of consumerism, where people were buying much more
than they really needed, it seemed like the economy was doing well. People created
installment plans so they would be able to buy more yet pay for them at a later point. This
created many people to struggle for money since they were relying on their next incoming
paycheck to pay for the goods they were buying. The purchasing of products made it seem
like the economy was doing well, yet it only hid the fact that it was actually suffering and
most people were in debt.

Political Cartoon showing the false prosperity in America. The cartoon shows how the prosperity of the
country was being fed propaganda to convince American consumers that the economy was thriving.

Stock Market Crash


In October 1929 America's stock market took a severe turn and crashed after several years
of growth. Throughout the 1920's, stock prices had been rising significantly and wall street
was shown to be experiencing a Bull Market. However, though the stock prices had been
rising, they were really just being over priced. As a result of the stock market crash, many
aspects of the economy were impacted such as causing bank failures, unemployment, tariffs
and federal reserves. Of those it was the American banks suffered most severely, thus
hurting all of American's, even if they did not own any stocks. People flooded to banks in a
panic, creating "bank runs", which was when people would withdraw all their money before
they would loose it. Even though people withdrew their money in a panic, "Americans lost
$140 billion of their deposited money" (Textbook). Bank failures caused all Americans to be
impacted by the stock market crash. Another of the more important results of the crash was
unemployment. Since banks were failing and people were on edge about the economy
unemployment began increasing tremendously. "By 1932, U.S manufacturing output had
fallen to barely half of its 1929 levels and unemployment had risen to between 12 and 15
million workers, or 25-30 percent of the workforce. Another 25% of the population
experienced reduced wages and/or hours. Thus, ~50% of America was either unemployed
or under-employed" (Textbook). This unemployment rate was drastic and a great concern
among the American workforce which was a great concern since it was hurting the American
economy. Unemployment and the bank failures were two of the major results of the stock
market crash, resulting in loss of large amounts of money and the unemployment left many
without an income. Through the results of the Stock Market Crash of 1929, the crash was
then an indirect component to the cause of the Great Depression late on.

The graph above shows the significant drop in the stock market during the Stock Market Crash of 1929 and
showing that by around 1932 the stock market was at it's lowest point, leading into the Great Depression.

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