Advertisement in America During the 1920s

Through the 1920’s advertisement changed the American way of life. Every aspect was changed, from the way people spent money to the way that banks and corporations functioned. With the rise of advertisement people suddenly realised that they really wanted things, and unsurprisingly they couldn't afford all of these things. Leaving the only solution, take out a loan. Loans and credit were previously things that the American people were relatively cautious about, but that was all changed with the rise of advertisements, and people's increased wants. The more they wanted the more they used credit, and the more they went into debt. This debt although did give the illusion of wealth in many cases. This is due to the fact that people could buy things without actually having the money, a person could buy a new car, even if they would never be able to pay off the debt, and corporations could build new factories, hire new people, with the same lack of discretion. This lack went so far as to have stocks being sold at well below their true price. People had the ability to buy stocks for a tenth of their true price, causing the company to look like they’re gaining money, even if their money doesn’t really exist. In some cases the money that was being used to buy the stocks of a company was loaned out by the same company, which fine until someone started asking questions of where the money came from.

This change of the distribution of money, from real money to credited money meant that companies would now produce even more, as people would now buy more. However the expansion of credit was not truly beneficial. As individuals begin to depend more upon credit, so did the corporations. They began to trade stocks with credited money, something that was bound to fail, as all it did was artificially inflate the company's earnings. All this credit trading left the economy in a state that although everything worked and everyone was happy, it only lasted as long as no one either asked for their money back, or even asked where the money was coming from. A fact that was seen when the economy crashed. This was caused due to the fact that if one person asks for their money back, and the other isn’t able to pay it back, then the other has to do the exact same to whoever owes them money, causing the cycle to continue until everything fails.

Sources:

http://adage.com/article/adage-encyclopedia/history-1920s/98699/

http://www.eyewitnesstohistory.com/snpmech4.htm