How Did Ww1 Affect The Economy

World War I created success for the United States through business with other countries, and the opportunity for economic growth, yet facilitated the Great Depression due to the failure of American agriculture and dependency on overleveraged countries. World War I defined a period of change for the world and forever shaped the United States. Once an undistinguished nation, the United States emerged from the war as a formidable force. This did not make the nation immune to disaster, however, as the United States, along with the rest of the world, would enter a period of economic inconsistency. It is with certainty that World War I created a series of events that would forever shape the course of modern history. First, the United States experienced …show more content…
Not only did commerce with Europe strengthen the economy, but the post-war world would as well. After the war, Europe began devoting money and resources to rebuilding infrastructure and repairing its damaged countries. The United States, however, did not experience this same issue and was able to devote its resources to economic expansion. With the help of several business oriented presidents, the United States used its war-time influence to expand its foreign market and promote big business at home during the following decade (Davis 323). Additionally, European economies were slow to recuperate due to its debt to the United States. Despite several attempts to have America forgive the debt, Europe remained unsuccessful as the United States continued to decline their offers, slowing European economic processes while improving its own (“The Dawes Plan…”). In fact, the war helped turn the United States into an advanced international economic power. In 1914, the United States was a net debtor and owed roughly $2.2 billion to foreign countries. By 1919, America had become a net creditor of $6.4 billion (Rockoff). Furthermore, as previously mentioned, American factories increased production greatly during the war to accommodate the needs of Europe and later the United States. This level of productivity would continue through the following decade as well. Factories previously tasked with making munitions and …show more content…
During the war, American produce was in high demand since war-torn European countries could no longer be self-sustained. Thus, farmers produced an excess of crop to feed most of Europe along with those in the United States. To do this, many took out loans to purchase additional land and expensive farm equipment. While this seemed to not be an issue at first, things began to change drastically. In only a short time after the war, Europe began to rebuild its infrastructure and become self-reliant. This meant Europe no longer needed American produce, and demand for it dropped sharply. Unfortunately, American farmers, who had already produced excess supply, now faced an economic nightmare. Crop prices plummeted 40 to 60 percent, and many farmers, already deep in debt, now had no way to repay it (Cochran 15). In a time where 48.8 percent of Americans lived in rural areas, the economic backlash was severe (“Urban and Rural…”). Many faced bankruptcy and foreclosure, and in fact, between 1930 and 1935, nearly 750,000 farms were lost. To make matters worse, when banks began to recall on loans many farmers were unable to repay, thus contributing to the failure of thousands of banks during the Great Depression. Some farmers resorted to penny auctions in which banks attempted to sell off possessions from bankrupt customers. Farmers, however, banded together and forced the bank to resell the items back to the original