Following a postwar recession from mid-1920 to the end of 1921, the economy picked up again and remained strong until the end of the decade. This prosperity, combined with tax cuts for the rich, led to a rising consumer culture.

The very nature of consumerism changed during this period, as new products filled the market. The automobile first became popular outside wealthy circles in the 1920s. Electrical appliances grew rapidly in popularity as electricity reached almost two-thirds of American homes by the mid-1920s. Refrigerators, washing machines, and vacuum cleaners flew off the shelves. The vast reach of the newly invented radio created a national market and spurred advertising to unprecedented levels.

One effect of prosperity was the consolidation of big business and banks. By the decade’s end, more than 1,000 companies per year were being swallowed up by mergers. A few corporations—such as Ford, Chrysler, and General Electric—dominated major industries. Industry leaders became immensely popular public figures.

New technologies allowed corporations to meet public demand by increasing productivity. Henry Ford installed the assembly line process in his automobile plants, maximizing outputs by allowing workers to stay in one place and master one repeated task. New developments in management methods increased efficiency by departmentalizing varied business concerns and creating a class of professional managers. Installment buying and credit programs allowed consumers to buy expensive goods they could not afford to purchase with one payment.

The 1920s ushered in a new era for workers. To increase productivity, some employers raised the wages of skilled workers without the prodding of labor unions. Partially in response, union membership declined during the 1920s. Manufacturers’ associations praised the non-union workplace, and companies made concessions to workers in attempts to stave off union formations.

This industrial boom left agriculture largely behind. Crop prices fell rapidly between 1919 and 1921 and remained low during the 1920s. Republicans, who did not believe in government intervention in the economy, were reluctant to help.

The Republican-dominated government of the 1920s advocated a spirit of isolationism, which meant retreating from global affairs. The U.S. refused to join both the League of Nations and the World Court established by the League. In 1928, the U.S. and France (and later, sixty other nations) signed the Kellogg-Briand Pact, which called for the outlawing of war and an end to aggression. This pact, however strong in theory, provided no enforcement mechanism.

Despite its isolationism, the U.S. did become involved in international affairs over the issue of war debts and reparations. The Allies had borrowed significantly from the U.S. during World War I and could not pay back this debt. Meanwhile, Germany owed reparations to the Allies but also could not pay. The Dawes Plan, devised by American banker Charles G. Dawes in 1924, scaled back U.S. demands for debt payments and reparations and established a cycle of U.S. loans that provided Germany with funds for reparations to the Allies, thus funding Allied debt payments to the U.S.

A prominent expression of American isolationism was immigration restriction. Not only did isolationists oppose U.S. involvement in European affairs, they also opposed the flood of European immigrants coming to the U.S. Between 1900 and 1915, more than 13 million immigrants came to the U.S., many of them from eastern and southern Europe and many either Catholic or Jewish, to the general dismay of the Protestant American public. Many Americans viewed these immigrants as a threat to American religious and social values, as well as to economic opportunities (because immigrants competed for jobs). In 1921, Congress set a quota of 350,000 for annual immigration. In 1924, the National Origins Act cut that number to 164,000 and restricted immigration from any one nation to 2 percent of the number of people in the U.S. of that national origin in 1890. This standard curtailed immigration from southern and eastern Europe and excluded Asians entirely.

Anti-immigrant sentiment peaked in the Sacco-Vanzetti case of 1921. Sacco and Vanzetti were two Italian immigrants charged with an April 1920 murder in Massachusetts. They were anarchists as well as immigrants, arousing frank hatred from the media and the judge in their case, who sentenced them to death. The case against Sacco and Vanzetti was circumstantial and poorly argued (although evidence now suggests that they were in fact guilty). The case was significant for its demonstration of nativist and conservative forces in America.