During the roaring twenties, times were high and spirits higher. American society seemed to be on a one-way trip to prosperity. Then all of a sudden, borrowing caught up with everyone. As the consumer fell in love with borrowing money and buying commodities off credit, no one stopped to think when these bills would have to be paid. “On top of revenue problems lay financial burdens inherited from the past” (Chudacoff 199). These past financial blunders were not only from that of the consumer, but also the city as well.
During previous years of prosperity and what seemed like never-ending expansion, cities had borrowed astronomical amounts of money to compensate. Among these funds were bond issues that came due during the 1930s. Unable to make these payments, many cities crumbled and resorted to “plan B.” Emergency money reserves were beginning to come into play and cities were scrambling to pay off these looming payments. Now, this may seem like an isolated problem to the average citizen, but it proved to affect an alarming number of people. “In 1932, during the depths of the Depression, many people became distrustful of failing banks and hoarded so much currency that the amount in circulation declined precipitously” (Chudacoff 199). This lack of fiscal responsibility by cities led to a more keen eye to be kept on spending by government officials. But, doesn’t this sound familiar to the financial crisis America is still recovering from in 2008? Go figure.