Causes Of The Great Depression

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However, the prosperity of the 1920’s was not shared evenly among the social classes in America. A study conducted by the Brookings Institution stated, “78 percent of all American families had incomes of less than $3,000. Forty percent had family incomes of less than $1,500. Only 2.3 percent of the population enjoyed incomes of over $10,000. Sixty thousand American families held savings which amounted to the total held by the bottom 25 million families.” (Goldston 26). The 40 percent of Americans at the lowest end of the economic scale received only 12 percent of the national income by 1929 (EV 549). This maldistribution of income between the rich and the middle class increased throughout the 1920’s. A major reason for this large and growing gap between the upper class and the working class Americans was that the manufacturing output increased throughout this period. As the production costs fell, wages went up slowly, and prices for goods remained at a constant. The majority ...

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able to buy them, the concept of buying on credit was established. Credit was immediately popular. Nearing the end of the decade, 75 percent of all automobiles were purchased on credit (EV 526). The credit system created artificial demand for products which people could not usually buy. People could not spend their regular wages to purchase products, because much of their income went toward their credit payments.
The poor distribution of wealth within the U.S extended to entire industries, helping one at the expense of another. The prosperity of the decade was not shared among the industries equally. While the automotive industry was thriving in the 1920’s, some industries, such as ...

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