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Federal Reserve Bank created
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America heading to recession - start of War made America the principle industrial nation and leading financial power
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Period: to
Boom years
GNP climbed by 21%
Stock market rose by 86%
National debt rose from 1.2billion to 25 billion -
End of WW1 - Peace impact
-Returning soldiers wanted their jobs back
-Factories making guns needed to return to making more peaceful products; less demand for these products
- Huge orders from Britain and France stopped as their industries slowly returned to peacetime production
- European agriculture slowly recovered - demand for American grain dropped sharply - farm incomes fell
- Unemployment rose to 12%
- GNP dropped by 10% in 1919 -
Prices falling
Prices fall by nearly 40% between 1920 and 1921, partly through overproduction and a lack of overseas orders, and partly because the Federal Reserve Bank pushed interest rates up to 7%