US. They were also widely copied in Europe in the 1920s. Mass production lowered costs and prices of engineered goods. Thanks to higher wages, more workers could now afford to purchase durable consumer goods such as cars.
Car production in the US rose from million in to more than million in . Similarly, there was a spurt in the purchase of refrigerators, washing machines, radios, gramophone players, all through a system of ‘hire purchase’ (i.e., on Fig. – T-Model automobiles lined up outside the factory. credit repaid in weekly or monthly instalments).
The demand for refrigerators, washing machines, etc. was also fuelled by a boom in house construction and home ownership, financed once again by loans. The housing and consumer boom of the 1920s created the basis of prosperity in the US. Large investments in housing and household goods seemed to create a cycle of higher employment and incomes, rising consumption demand, more investment, and yet more employment and incomes.
In , the US resumed exporting capital to the rest of the world and became the largest overseas lender. US imports and capital exports also boosted European recovery and world trade and income growth over the next six years. All this, however, proved too good to last. By the world would be plunged into a depression such as it had never experienced before.
. The Great Depression The Great Depression began around and lasted till the mid- 1930s. During this period most parts of the world experienced catastrophic declines in production, employment, incomes and trade. The exact timing and impact of the depression varied across countries.
But in general, agricultural regions and communities were the worst affected. This was because the fall in agricultural prices was greater and more prolonged than that in the prices of industrial goods. The depression was caused by a combination of several factors. We have already seen how fragile the post-war world economy was.
First: agricultural overproduction remained a problem. This was made worse by falling agricultural prices. As prices slumped and agricultural incomes declined, farmers tried to