The Great Depression and the New Deal: A Very Short Introduction (Very Short Introductions Book 166)

by Eric Rauchway

Many Americans’ optimism grew, too: they thought they had entered a new era of prosperity, when more Americans could afford more luxury goods and live, at least materially, better lives than ever before. So securely did they hold this belief that they accepted newly available offers of credit in order to buy what they could not afford from their own pockets. By the end of the decade Americans were living lives well-furnished with debt.

The aftermath seemed to prove the critics correct. In the years that followed, other countries retaliated by erecting their own tariff barriers, and world trade fell by one quarter of its volume. Blocking other countries from their American markets made it harder for foreign powers to repay their debts outstanding from World War I. As one writer explained in the New York Times, “there is not enough gold in the world to pay America; therefore America must be paid by loans from America and by goods sold in America.”