over-production + under-consumption

• It can be argued that the economic crisis was caused by over-production & under-consumption.
• Prior to the crash mass production methods, such as moving assembly lines & easy credit made goods more accessible to the

  public as they became affordable, for example vacuum cleaners & Henry Ford’s cars.
• This is important in leading to the economic crisis because manufacturers were simply over-producing goods and the market became saturated as the people who could afford them already had them which eventually resulted in the layoff of thousands of workers because of the reduced demand.
• However, this cannot be the most important factor as although jobs were lost it is extremely important to remember that after WWI unemployment stood at over 11% therefore although many of these jobs were short-term they still provided families with some income.
• In addition, prosperity was not being shared across society equally with workers’ on very low wages and the top 5% of the population owning 1/3 of America’s wealth, thus, the profits from booming industry clearly did not go to the workers.
• Prosperity not being shared is important in leading to the economic crisis because the poor simply could not afford to update goods frequently, if at all & under-consumption resulted in goods piling up in warehouses across the country & many businesses going into foreclosure.
• However, this cannot be the most important factor as business go through ‘natural’ cycles of decline, such as the ‘Long Depression’ in 1873, and the results of these did not have such a major impact on the country e.g. unemployment did not reach anywhere near 25% therefore this alone is not enough.
• Overall, some Historians argue that over-production & under-consumption was the most important reason for the economic crisis because it resulted in increasing unemployment & companies

  going bust because there were too many goods and not enough buyers.
• However, most Historians argue that the Republican policies were more important because that this only occurred because of the under-regulation of businesses and lack redistribution of wealth within society at this time which ensured the US economy would never continue to boom.