How Did The Recession Affect The Economy During The 1920's

778 Words4 Pages

The economy during the 1920’s seemed to be one of great wealth and prosperity, but in the very beginning of the decade, people experienced superficial prosperity. This is when people seem like they have wealth, but it is an illusion. The economic situation at the turn of the decade was grim. The Economic Recession of 1920-1921 lasted for about 18 months. The cause of the recession is widely believed to be a mixture of high federal debt after the war, labor unions rebelling, inflation rates jumping 20%, and a too tight economy (Murphy). Companies and farms had produced so much during the war, that after the war, they could no longer sell their products. During this recession, the unemployment rate in the country reached 11.7%, and on January 25, 1921, the nation’s unemployment rate reached approximately 3.5 million people (Murphy). During most of the recession, the government maintained a strong laissez-faire ideology and barely intervened. To end the Recession, Herbert Hoover, then …show more content…

This time period was painful. The collapse in the monetary base controlled by the Federal government during the recession was the largest in United States history (Murphy). People were forced out of their jobs all across the face of the nation. Companies fell apart because they could no longer support their workers and the items they were producing. Thousands of farms and companies disappeared. Not only did the Economic Recession from 1920-1921 hurt the country at that time, it also set somewhat of a precedent for the Great Depression in the not too distant future. The economic experience of 1920–21 reinforces the idea of a free-market in which any type government intervention is a disturbance to economic recovery (Mataconis). While this is true, it showed a possible weakening of the government at this time. The country was still recovering from a deadly overseas war, and the Economic Recession did nothing to

Open Document