Overproduction

After World War I ended in 1918, there was no longer a need to produce war supplies. Companies soon began producing new products to sell to everyday consumers. The automobile, washing machine, refrigerator, radio, and television were some of the many new products created during this time.

People were eager to buy these new inventions, but many did not have the money to purchase them. Banks offered loans to these people so they could pay for these items. Demand was high for awhile, but eventually sales slowed. After all, people did not need four refrigerators or three cars. Soon companies were making more products than they could sell, and they began to lose money. As a result, these companies had to lay-off workers and stop production. Many places of employment shut down entirely and closed their doors.