on of the 1930s as a consequence of wasteful malinvestment and structural maladjustments in the real economy which took place in the boom of the 1920s.
After World War I and a postwar recession, the prosperity of the 1920s appears extraordinary. From 1922 to 1929, GNP grew at an annual rate of 4.7 percent and unemployment averaged 3.7 percent. Part of this growth has been attributed to the emergence of large-scale commercial and industrial enterprises that took advantage of new continuous process technologies. Coordination by the emerging system of modern management, as described by Chandler (1977) produced more efficient vertically-integrated enterprises that captured economies of scale and scope.
More specifically the United States began to experience the growing importance of consumer durables. The automobile epitomized the shift: Production in the U.S. rose from fewer than two million units in 1919 to more than five million in 1929. According to Eichengreen (1992), data for the US show a rise in the share of consumer durables from less than 9 per cent in the first two decades of the century to 11 percent in the 1920s In addition to automobiles, U.S. consumption spending also rose in such areas a furniture, household appliances, and radios. Eichengreen suggests that the growth of this sector may have contributed to a type of cyclical instability in the American economy. Such a shift into the production and consumption of consumer durables, financed through installment debt, provided an additional channel through which disruptions to financial markets, ty
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