A lot of it had to do with the lost production that was halted at the end of the war. This, coupled with the influx of labor that was caused by returning troops who needed jobs, drove unemployment through the roof. As a result, nobody had any money to spend, so companies and businesses closed from lack of sales, etc. etc.
Full Answer
The post–World War I recession was an economic recession that hit much of the world in the aftermath of World War I. In many nations, especially in North America, economic growth continued and even accelerated during World War I as nations mobilized their economies to fight the war in Europe.
Programs and procedures put in place during World War I had in many instances been removed or modified after the armistice, which resulted in a certain amount of economic dislocation. In particular, U.S. manufacturers had built up large inventories of goods, but the consuming public was unable to absorb them.
In particular, U.S. manufacturers had built up large inventories of goods, but the consuming public was unable to absorb them. At the same time, American exports to overseas nations dropped sharply at war’s end, which deepened the plight of industry.
At the same time, American exports to overseas nations dropped sharply at war’s end, which deepened the plight of industry. The results of the recession were high unemployment, a broad series of business bankruptcies and generally falling wages for those Americans who kept their jobs.
Factors identified as contributing to the downturn include returning troops, which created a surge in the civilian labor force and problems in absorbing the veterans; a decline in labor union strife; changes in fiscal and monetary policy; and changes in price expectations.
In North America, the recession immediately following World War I was extremely brief, lasting for only seven months from August 1918 (even before the war had actually ended) to March 1919. A second, much more severe recession, sometimes labeled a depression, began in January 1920.
What happened to the U.S. economy immediately after World War I ended? It went into a brief recession.
Despite isolationist sentiments, after the War, the United States became a world leader in industry, economics, and trade. The world became more connected to each other which ushered in the beginning of what we call the “world economy.”
A World Power The war ended on November 11, 1918, and America's economic boom quickly faded. Factories began to ramp down production lines in the summer of 1918, leading to job losses and fewer opportunities for returning soldiers. This led to a short recession in 1918–19, followed by a stronger one in 1920–21.
Production declined at the end of World War I, along with a surge in unemployment from soldiers returning home, creating a brief seven-month recession from 1918-19.
The Economic Impact of World War I World War I sped up American industrial production, leading to an economic boom throughout the 'Roaring Twenties. ' While the war was a devastating experience for France and the United Kingdom, these countries were able to recover economically without too much difficulty.
The economy was mired in recession in 1914 and war quickly opened up new markets for American manufacturers. In the end, World War I set off a 44-month period of growth for the United States and solidified its power in the world economy.
What happened to the U.S. economy after World War I ended? High inflation and increasing unemployment caused a recession.
Four empires collapsed due to the war, old countries were abolished, new ones were formed, boundaries were redrawn, international organizations were established, and many new and old ideologies took a firm hold in people's minds.
Social life also changed: women had to run businesses while the men were at war and labor laws started to be enforced due to mass production and mechanization. People all wanted better living standards. After WW1, the need for an international body of nations that promotes security and peace worldwide became evident.
The lingering effects of World War I (1914-1918) caused economic problems in many countries, as Europe struggled to pay war debts and reparations. These problems contributed to the crisis that began the Great Depression.