The 1920s
The 1920s brought prosperity, new technology, and cultural change, alongside deep social conflict and economic weaknesses.
Prosperity and consumer culture
Many Americans enjoyed rising incomes in the 1920s. Mass production, symbolised by Henry Ford's assembly line (introduced in 1913) and the affordable Model T, made cars widely available. Electricity spread, and households bought radios, refrigerators, and vacuum cleaners, often on credit through instalment plans.
Cultural change
Cities, radio, films, and jazz created a national popular culture. Young women called flappers challenged traditional norms. The Harlem Renaissance celebrated Black art and literature, with writers such as Langston Hughes and Zora Neale Hurston and musicians such as Louis Armstrong and Duke Ellington.
Prohibition
The Eighteenth Amendment banned the manufacture and sale of alcohol from 1920. Illegal speakeasies and bootlegging flourished, and organised crime figures such as Al Capone grew rich. Prohibition was widely evaded and was repealed by the Twenty-first Amendment in 1933.
Social conflict
The 1920s also saw a revived Ku Klux Klan, which claimed millions of members and targeted Black Americans, Catholics, Jews, and immigrants. The Red Scare of 1919-1920 led to raids on suspected radicals. The Immigration Act of 1924 set strict national-origin quotas. The Scopes Trial (1925) over teaching evolution highlighted tensions between tradition and modernity.
Republican presidents and business
Presidents Harding, Coolidge, and Hoover favoured business, low taxes, and limited regulation. Coolidge reportedly said 'the chief business of the American people is business'. High tariffs protected industry but limited trade.
Hidden weaknesses
Beneath the boom were weaknesses: farmers suffered low prices throughout the decade; wealth was concentrated at the top; consumer debt rose; banks were poorly regulated; and stock prices soared on speculation, often with borrowed money ('buying on margin').
The Crash of 1929
In October 1929, stock prices collapsed, with panic selling on 'Black Thursday' (24 October) and 'Black Tuesday' (29 October). The Dow Jones index eventually fell nearly 90% from its 1929 peak by 1932. The crash wiped out savings and confidence but was a trigger, not the sole cause, of the Depression.
Worked example
An investor in 1929 buys 10,000 dollars of shares, paying 1,000 and borrowing 9,000 'on margin'. When prices fall 20%, his shares are worth 8,000, less than his loan, and his broker demands repayment. Forced selling by thousands of margin investors pushed prices down further, turning a decline into a crash.
Key takeaways
The 1920s brought mass production, cars, appliances, and credit-based consumerism. Jazz, radio, flappers, and the Harlem Renaissance reshaped culture. Prohibition (1920-1933) fuelled organised crime. A revived Klan, the Red Scare, immigration quotas, and the Scopes Trial showed conflict. Pro-business policies coexisted with farm distress, inequality, and speculation. The October 1929 crash triggered economic collapse.
Flashcard
Henry Ford, 1913
Check your understanding
Why did buying stocks 'on margin' make the 1929 crash worse?