SS 1
POSTWAR AMERICAN
ECONOMIC PROSPERITY
If you had told the average American at the beginning
of 1920 that the decade would come to be known as
a period of excess and affluence, they wouldn’t have
believed you. The economy was looking grim as the
new decade began. America had entered World War
I (then known as the Great War) on April 6, 1917, and
had accordingly spent significant amounts of money
funding the war effort. This wartime expenditure
helped fuel inflation, which often occurs whenever
an economy experiences an artificial injection of
money (for example, when the government purchases
significant amounts of a product for a military
enterprise or when the government distributes money
to stimulate consumer spending). The period of
1916−20 is notable for experiencing the highest rates of
inflation ever seen in U.S. history—prices rose a total
of 80 percent in that four-year period, and the nation
experienced an economic recession.2 As Americans
began purchasing fewer and fewer goods because of
inflated prices, and as the economy finally wrapped up
its wartime productivity, the period experienced one of
the worst declines in production in American history.3
That all began to change as 1920 progressed. From June
1920 onward, prices began to drop, restabilizing the
economy and giving consumers more spending power.
People began to have more money in their pockets as
well as more interesting things to spend money on. Part
of what contributes to our image of the 1920s as a period
of economic excess is the rapid rise of new consumer
products that were developed, refined, and marketed in
the decade. An example of this boom is the rapid growth
of the automobile industry. Car ownership tripled in
the 1920s, and with increased car ownership came new
markets for new types of goods: drivers needed gas
stations, wanted cheap and accessible lodging (resulting
in the birth of the “motel,” or motor hotel), and sought
out new forms of entertainment that were often held
2025–2026 Literature Resource Guide
11
Achievement First, Amistad - New Haven, CTF. Scott Fitzgerald and his family. Car ownership tripled in
the 1920s, and The Great Gatsby features several important
scenes involving cars.
further away from their homes, such as athletic events,
movie theaters, and public musical performances.4
The Great Gatsby features several important scenes
involving cars, with crucial plot points revolving around
the size, shape, and operation of luxurious automobiles.
Twenty years earlier, these scenes would have been
exotic to readers; in 1925, they spoke to the country’s
fascination with the car as a status symbol and as an
everyday means of getting around. Consumer culture, or
a national emphasis on spending money and acquiring
material goods, was officially “in,” and many novelists,
including Fitzgerald, sought to represent, explore,
and critique the nation’s newfound obsession with
consumption.
With new inventions came new opportunities for
employment, and many Americans now found
themselves employed in manufacturing sectors
producing new domestic conveniences like early forms
of refrigerators and washing machines. The rapid
electrification of the nation during the early twentieth
century also brought with it new jobs, and increasing
consumer demand for leisure items like radios and
phonographs helped create new industries related to
the creation and distribution of entertainment. For most
Americans, these technological developments, along
with significant cultural changes, were really what made
the decade “roar.” Other than two major constitutional
amendments (which will be discussed later), the two
presidential administrations of the period—those
of Warren G. Harding from 1920−23 and Calvin
Coolidge from 1923−29—were ideologically and
administratively consistent. In other words, unlike some
historical periods in which major political upheavals
altered a country’s make-up, the 1920s were defined
more by technological, cultural, and demographic