In the s, people pretended that they could afford these things and more. Taking advantage of the growing film and radio entertainment industries, advertisers started campaigns that encouraged people to spend beyond their means or comfort level. These advertisements advocated that the more money people spent and the more things that they purchased, the more their lives would grow in value.
It was further implied that more jobs would be created and the economy would be strengthened. In reaching for a better life for themselves and their families, people took out massive loans from banks and stores on credit. Economists have been hard pressed to explain why "prosperity's decade" ended in financial disaster. In , the American economy appeared to be extraordinarily healthy. Employment was high and inflation was virtually non-existent.
The United States accounted for nearly half of the world's industrial output. Still, the seeds of the Depression were already present in the "boom" years of the s. For many groups of Americans, the prosperity of the s was a cruel illusion. Even during the most prosperous years of the Roaring Twenties, most families lived below what contemporaries defined as the poverty line.
Although labor productivity soared during the s because of electrification and more efficient management, wages stagnated or fell in mining, transportation, and manufacturing. Hourly wages in coal mines sagged from Prosperity bypassed specific groups of Americans entirely. Mexican Americans, too, had failed to share in the prosperity. During the s, each year 25, Mexicans migrated to the United States. Most lived in conditions of extreme poverty. In Los Angeles the infant mortality rate was five times higher than the rate for Anglos, and most homes lacked toilets.
A survey found that a substantial number of Mexican Americans had virtually no meat or fresh vegetables in their diet; 40 percent said that they could not afford to give their children milk.
The farm sector had been mired in depression since Farm prices had been depressed ever since the end of World War I, when European agriculture revived, and grain from Argentina and Australia entered the world market.
Strapped with long-term debts, high taxes, and a sharp drop in crop prices, farmers lost ground throughout the s. In , a farmer's income was 40 percent of a city worker's. By , it had sagged to just 30 percent. The decline in farm income reverberated throughout the economy. It lowered the amount of money in circulation, businesses and banks closed, and people became unemployed. Why was a high level of consumer spending so critical to s prosperity, and why was the economic expansion of the s ultimately unsustainable?
This economic growth resulted from technological and scientific advancement, and the innovation of the assembly line. While the October stock market crash triggered the Great Depression, multiple factors turned it into a decade-long economic catastrophe.
Overproduction, executive inaction, ill-timed tariffs, and an inexperienced Federal Reserve all contributed to the Great Depression. The fundamental cause of the Great Depression in the United States was a decline in spending sometimes referred to as aggregate demand , which led to a decline in production as manufacturers and merchandisers noticed an unintended rise in inventories. The main reason why farmers did not prosper in the s had to do with the international economy.
This meant that American farmers were able to sell lots of their produce at good prices. Many farmers borrowed money to buy land to produce more crops.
But after WWI ended, European farms were able to produce again.
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