The Interwar Period

From boom to bust – the Roaring Twenties and the Great Depression.

Securities and Exchange Commission (SEC)
Early 1920s
Diners Club card
Play an active role in managing the economy

The Roaring Twenties

The Roaring Twenties was a period of unprecedented economic growth and consumer culture in the United States and other Western countries. The end of WWI brought about a sense of optimism and prosperity, as industries shifted from wartime production to consumer goods.


The introduction of mass production techniques, such as the assembly line, led to a significant increase in productivity and a decrease in the cost of goods. In turn, fueling a consumer boom and the growth of advertising. People for the first time began purchasing automobiles, radios, and other household appliances.

One of the most iconic symbols of the Roaring Twenties was the automobile, which became a symbol of freedom and status. The Ford Model T, the first affordable car for the masses, and by the end of the 1920s, there were over 23 million registered vehicles in The US.

The growth of the automobile industry also spurred the development of related industries, such as oil, rubber, and steel.

The Stock Market Crash of 1929

The Stock Market Crash of 1929 marked the end of the Roaring Twenties and the beginning of the Great Depression. The crash was the result of a combination of factors, including rampant speculation, excessive use of margin loans, and an overvalued stock market.

The Dow Jones Industrial Average reached its peak on September 3, 1929, and then began a steady decline, culminating in the infamous Black Tuesday on October 29, when the market lost 12% of its value in a single day.


The consequences of the crash were severe and far-reaching. Banks failed, businesses went bankrupt, and millions of people lost their jobs. The Great Depression lasted for a decade and had a profound impact on the global economy.

International trade plummeted, as countries imposed protectionist measures to shield their domestic industries. The economic turmoil also contributed to the rise of extremist political movements in Europe, ultimately leading to WWII.

The New Deal

In response to the Great Depression, President Franklin D. Roosevelt introduced a series of economic policies known as the New Deal. These policies aimed to provide relief for the unemployed, stimulate economic recovery, and reform the financial system to prevent future crises.

The New Deal included a wide range of programs, such as the Civilian Conservation Corps (CCC), which provided jobs for young men in environmental conservation projects, and the Social Security Act, which established a system of unemployment insurance and old-age pensions.


The New Deal also led to the creation of several regulatory agencies, such as the Securities and Exchange Commission (SEC) to regulate the stock market and the Federal Deposit Insurance Corporation (FDIC) to insure bank deposits. While the New Deal did not end the Great Depression, it did provide much-needed relief for millions of Americans and laid the foundation for the modern welfare state.

The Rise of the Automobile Industry

The automobile industry underwent significant growth in the early 20th century, with companies such as Ford and General Motors leading the charge. Ford’s use of the assembly line and General Motors’ acquisition of smaller manufacturers contributed to the mass production of cars and the introduction of a variety of models to suit different consumer preferences.


This growth in the automobile industry had far-reaching effects, spurring the development of related industries such as oil, rubber, and steel. It also played a significant role in shaping the urban landscape as cities expanded to accommodate the growing number of cars on the road.

With the development of highways and the suburbanization of America, cars became an essential part of everyday life, driving further demand for automobiles and fueling the growth of the industry.

The Aviation Industry

The interwar period saw the development of commercial aviation, with airlines like Pan American World Airways (Pan Am) leading the way. Founded in 1927, Pan Am initially focused on mail and cargo services between the United States and Latin America, but soon expanded to passenger flights. The introduction of larger, more efficient aircraft, such as the Boeing 314 Clipper, enabled airlines to offer long-distance flights, connecting cities across the globe.


The growth of commercial aviation also led to the development of airports and air traffic control systems, as well as the establishment of regulatory bodies, such as the International Air Transport Association (IATA). The aviation industry would continue to expand and innovate throughout the 20th century, becoming an essential mode of transportation for both business and leisure travel.

The Radio and Entertainment Industry

The rise of radio broadcasting during the interwar period transformed the entertainment industry and the way people consumed news and information.

Radio stations began to emerge in the early 1920s, offering a mix of music, news, and serialized dramas. By the end of the decade, there were over 600 radio stations in the United States, reaching millions of listeners. The popularity of radio also led to the growth of the advertising industry, as companies sought to reach consumers through this new medium.


The interwar period also saw the rise of Hollywood and the golden age of cinema. The introduction of sound in films, such as in the 1927 movie “The Jazz Singer,” revolutionized the movie-going experience and attracted even larger audiences. Hollywood became synonymous with glamour and success, producing iconic stars like Charlie Chaplin, Greta Garbo, and Clark Gable.

The Emergence of Consumer Credit

The growth of consumer culture during the early 20th century led to the emergence of consumer credit, as businesses sought to facilitate consumer spending. Installment plans, which allowed customers to purchase goods on credit and pay for them over time, became increasingly popular for items like automobiles, furniture, and appliances. These plans enabled more people to afford expensive items, further fueling the consumer boom.


The introduction of credit cards, such as the Diners Club card in 1950, further revolutionized consumer credit by allowing customers to make purchases without cash and pay their balance at a later date. The widespread adoption of credit cards would have a lasting impact on consumer spending habits and the global economy.

The Growth of Retail

The interwar period saw the expansion of department stores and chain stores, such as Woolworth’s, which offered a wide range of goods under one roof. These stores capitalized on the growing consumer culture by providing a convenient and enjoyable shopping experience.

Department stores, like Macy’s and Selfridges, became iconic symbols of the era, offering not only products but also services like restaurants, beauty salons, and even art galleries.


Chain stores, like Woolworth’s, revolutionized retail by offering standardized products at low prices, made possible by their large-scale purchasing power and efficient distribution networks. The growth of retail during this period laid the foundation for the modern shopping experience and the rise of global retail giants in the latter half of the 20th century.

The Influence of Keynesian Economics

The impact of John Maynard Keynes’ theories on government intervention in the economy was profound during the interwar period and beyond.

Keynes argued that governments should play an active role in managing the economy, particularly during times of recession or depression. His ideas, outlined in his 1936 book “The General Theory of Employment, Interest, and Money,” challenged the prevailing belief in laissez-faire economics and advocated for government spending to stimulate demand and reduce unemployment.


Keynesian economics greatly influenced the economic policies of the New Deal in the United States and the post-World War II reconstruction efforts in Europe. The adoption of Keynesian principles by governments around the world helped to shape the economic landscape of the 20th century and remains a significant school of thought in modern economic policy.

The End of the Gold Standard

The interwar period saw the abandonment of the gold standard, a monetary system in which the value of a country’s currency was directly linked to a fixed amount of gold.

The gold standard had been the dominant global monetary system since the late 19th century, but the economic turmoil of the Great Depression exposed its limitations. Countries that remained on the gold standard experienced deflation and high unemployment, as they were unable to devalue their currencies to stimulate demand and boost exports.


In response to these challenges, countries began to abandon the gold standard in favor of fiat currency, which is not backed by a physical commodity but rather by the trust and confidence in the issuing government.

The United States officially abandoned the gold standard in 1933, followed by other major economies, such as France in 1936. The United Kingdom abandoned theirs in 1931. The move towards fiat currency allowed governments greater flexibility in managing their economies and marked a significant shift in global monetary policy.

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