Easy Credit and Income Distribution

Easy credit refers to the ease that most private individuals had in the 20's when attempting to acquire credit, or the ability of an individual to obtain goods or services before payment, based on the trust that payment will be made in the future.

The availability of this easy credit meant that persons no longer had to save for years to buy a house. They no longer felt the pressure to reserve and set aside monetary assets that their progenitors had, nor did the rising generation have inclinations to use this credit sparingly as many of their parents might have. This credit fueled the stock market inflation through speculative and marginal purchases.

In the background, not enough to reach public attention until it was to late was the farming industry. Many families in the agricultural business were the first to feel pressure from the credit system when banks came calling for their loans and pay. Farmers had taken out substantial loans to help pay for everything from new equipment to failed crops in hopes of repairing the damage caused by insufficient and excessive use over wartime. Then these loans collapsed under the mild economic pressure. As the farming sector experienced its crash the banks began to realize that they would not have any money if private persons did not pay back the substantial credits that had been extended. More loans and advances were called back and defaulted by those who did not have the money to pay back. This because they did not have the money in the first place. The rich 1% were capturing as much as 70% of the income from the decade leaving the other 30% to be absorbed by the poor 90%. As the rich became richer, the poor became poorer because of their inability to pay back cash advances.