The Great Depression of 1920-21 was an sharp recession in the US, shortly after World War I. It lasted from January 1920 to July 1921. Following the end of the Depression of 1920–21, the Roaring Twenties brought a period of economic prosperity. A varied amount of factors have been said to contribute to the depression, which related to the economy following WWI. There was a Post-World War I recession, which some people thought was a wake up call for what was happening and what was going to happen but they never once thought that it would ever be so bad as what it was. It lasted for 18 months and people couldn’t do anything and they felt trapped due to the economy. The economy started to grow, though it had not yet completed all the adjustments in shifting from a wartime to a peacetime economy.
Factors that potentially caused the crisis included: the troops returning from the war which created a rise in the civilian labor force, a decline in labor union strife, and a shock in agricultural prices and also the expectations of deflation.
Adjusting from war time to peace time was a huge shock for the U.S. economy. Factories focused on war time production had to shut down their production. The recession that occurred in 1920, however, was also affected by the adjustments following the end of the war, particularly the increases and decreases in the number of soldiers.
In the early 1920s, both prices and wages changed more quickly than today, and thus employers may have been quicker to offer reduced wages to returning troops, hence lowering their production costs, and lowering their prices.
The Roaring Twenties and the Great Depression 1920-1940 (Graphic U.S. History) by Saddleback
The Great Depression and New Deal: A Very Short Introduction (Very Short Introductions) by Eric Rauchway (24 Apr 2008)