The American Economy in the 1920's Was a Bubble Destined to Burst

Topics: Wall Street Crash of 1929, Great Depression, United States Pages: 2 (779 words) Published: March 20, 2013
“The Economy of 1920’s America was a bubble destined to burst” The statement that the economy of 1920’s American was a bubble destined to burst is thoroughly correct. The uprising issues of Protectionism, weak industries, weak banks, overproduction of goods and an uneven distribution of wealth meant that America was in a vicious spending spree that could only be broken by the 1929 Wall Street Crash. When one thinks of an economic depression, one first considers the banks and how they were linked to the said crash. The banks in the case of the Depression were closely related to the Wall Street Crash. In the 1920’s banks weren’t the large networks that they are today, so when they went bankrupt, there was nothing to fall back on. Banks had also loaned out far too much money keep a stable economic flow. Many Americans also decided to join in on the share market game in hopes of living out the American Dream in a “get rich quick” manner and were borrowing huge amounts of money to invest, often in an uneducated manner. As this was continuing, banks were making it possible to borrow huge sums of money and the government, still stuck in its belief of Laisseize Fare- that is, that the government would simply let the economy sort itself out without any government intervention. With this flimsy and unstable system of banking- there was bound to be a huge economic impact such as the crash. After the atrocities of World War 1, America decided it’s safest way to keep out of global issues and wars was to focus on being a self-serving country run on the idea of Protectionism. The key act of Protectionism was that tariffs were placed on imported goods, thus making American products much more appealing to its citizens. This also created a huge economic flowing acting almost exclusively nationally. However the notion of Protectionism became detrimental to America as 23 countries soon placed tariffs on American exports that were already seen as luxuries by other countries. It...
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