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The time period from 1890 to 1929 experienced steady growth in the U.S. [1] The Roaring 20s was not the cause of the Great Depression. The Great Depression wa

The time period from 1890 to 1929 experienced steady growth in the U.S. [1] The Roaring 20s was not the cause of the Great Depression. The Great Depression was caused by a variety of factors, primarily unsustainable debt issuance and overproduction in the agricultural sector. Other important factors include crushing wartime debts owed by European nations to American creditors (vastly harming exports), a liquidity crunch and massive deflation due to adherence to the gold standard, and uncertainty by Capital resulting in a lack of expansion.[2] 1. https://en.wikipedia.org/wiki/Economic_history_of_the_United_States#Economic_growth_and_the_1910_break https://en.wikipedia.org/wiki/Economic_history_of_the_United... 2. https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression

pjmorris 10y ago
I always thought that the 'Roaring 20s' were caused by 'unsustainable debt issuance'. You seem to not connect the two... can you elaborate?
- linkregister 10y ago
  It's a common misconception that the stock speculation bought on leverage was the cause of the depression. Indeed, margin calls caused automatic stock sales to cover the leverage, forcing stock prices down. However, the cascade of bank failures occurred due to due to defaulting agricultural loans. The loans' refinancing requests were suddenly refused when European powers pulled currency out of U.S. banks in order to pay their war debts and reparations. The stock market crash was not the cause of the depression; just one of many larger factors that precipitated it.
  - pjmorris 10y ago
    I didn't distinguish between borrowing for stocks and borrowing for agriculture. I see both as elements of the unsustainable debt buildup. I view the stock market crash as a symptom of the unsustainable debt, not as a cause.
Clubber 10y ago
Let me clarify. The primary debt issuance was debt taken by people doing stock market speculation. The joke at the time was that if your shoe shine boy was asking you about stocks, something weird is about to happen. The agriultural overproduction was a result of the drop in market prices for goods, so the farmers ramped up production to make up for it, ignoring good farming practices, notably proper tilling and crop / land rotation which resulted in the deterioration of the top soil (dust bowl). All of this happened in the Roaring 20s. As far as before the 20s, you had WWI and the industry kings manipulating the markets. They were doing fine, but the people working under them weren't. This was the era of industrialization, child labor and The Jungle. It was wonderful if you were an industry titan, but bleak for most everyone else. Anyway, my point being, the great prosperity we experienced after WWII was more of an anomaly that anything else. I believe it was sustainable through smart regulation and government investment among other things, but interests have been working hard to bring us back to where we were before.
- linkregister 10y ago
  The stock market in the 1920s held far less importance then than it does today. At that time, very few people had access to the stock market. The shoe shine boy anecdote is mythology. It is true that margin calls cascaded to obliterate billions of dollars of value, but the investors impacted were mostly trading firms, banks, and capitalists. Joe sixpack had no exposure to it since there was no such thing as a market-backed pension fund (who even had pensions back then?) and 401(k). Corporate earnings did not drop significantly during and months after the crash. Production and consumption were not affected. The primary reason for bank failures in the following year were from agricultural defaults. The small, regional banks were the first to fall, not the big city banks. I don't contest any of your points except "The roaring 20s caused the Great Depression." The economic growth in the 1920s was steady and mostly not speculative. The stock market was speculative but Finance was a much smaller part of the economy at that time. An avalanche of other factors were the causes. I have no firm opinion regarding post-WW2 growth as anomalous. I think that the idea has merit. The scope of my argument is limited to 1890-1933.

pjmorris 10y ago

I always thought that the 'Roaring 20s' were caused by 'unsustainable debt issuance'. You seem to not connect the two... can you elaborate?

linkregister 10y ago
It's a common misconception that the stock speculation bought on leverage was the cause of the depression. Indeed, margin calls caused automatic stock sales to cover the leverage, forcing stock prices down. However, the cascade of bank failures occurred due to due to defaulting agricultural loans. The loans' refinancing requests were suddenly refused when European powers pulled currency out of U.S. banks in order to pay their war debts and reparations. The stock market crash was not the cause of the depression; just one of many larger factors that precipitated it.
- pjmorris 10y ago
  I didn't distinguish between borrowing for stocks and borrowing for agriculture. I see both as elements of the unsustainable debt buildup. I view the stock market crash as a symptom of the unsustainable debt, not as a cause.

Clubber 10y ago

Let me clarify. The primary debt issuance was debt taken by people doing stock market speculation. The joke at the time was that if your shoe shine boy was asking you about stocks, something weird is about to happen. The agriultural overproduction was a result of the drop in market prices for goods, so the farmers ramped up production to make up for it, ignoring good farming practices, notably proper tilling and crop / land rotation which resulted in the deterioration of the top soil (dust bowl). All of this happened in the Roaring 20s. As far as before the 20s, you had WWI and the industry kings manipulating the markets. They were doing fine, but the people working under them weren't. This was the era of industrialization, child labor and The Jungle. It was wonderful if you were an industry titan, but bleak for most everyone else. Anyway, my point being, the great prosperity we experienced after WWII was more of an anomaly that anything else. I believe it was sustainable through smart regulation and government investment among other things, but interests have been working hard to bring us back to where we were before.

linkregister 10y ago
The stock market in the 1920s held far less importance then than it does today. At that time, very few people had access to the stock market. The shoe shine boy anecdote is mythology. It is true that margin calls cascaded to obliterate billions of dollars of value, but the investors impacted were mostly trading firms, banks, and capitalists. Joe sixpack had no exposure to it since there was no such thing as a market-backed pension fund (who even had pensions back then?) and 401(k). Corporate earnings did not drop significantly during and months after the crash. Production and consumption were not affected. The primary reason for bank failures in the following year were from agricultural defaults. The small, regional banks were the first to fall, not the big city banks. I don't contest any of your points except "The roaring 20s caused the Great Depression." The economic growth in the 1920s was steady and mostly not speculative. The stock market was speculative but Finance was a much smaller part of the economy at that time. An avalanche of other factors were the causes. I have no firm opinion regarding post-WW2 growth as anomalous. I think that the idea has merit. The scope of my argument is limited to 1890-1933.