In August 1929, Women’s House Journal published an article titled “Everyone Should Be Rich”. In it, businessman John J. Raskob told Americans that if they put $ 15 in the stock market every month, in 20 years they could have $ 80,000 (over $ 1 million today). hui). Raskob insisted that “almost any employee can do it if they try.”
For rich, white Americans like Raskob, the “Roaring Twenties” were a time of immense economic prosperity. Yet for most Americans this was not the case. Robert Chiles, professor of history at the University of Maryland, points out that the average salary of most workers in 1929 was around $ 20 a month. So if most Americans had followed Raskob’s advice, they would have put three-quarters of their profits on the stock market. “It’s a bit absurd,” Chiles says.
In fact, income inequality grew so much during the 1920s that by 1928 the richest 1% of families received 23.9% of all pre-tax income. About 60 percent of families earned less than $ 2,000 a year, the income level that the Bureau of Labor Statistics classified as the minimum living income for a family of five.
As WEB Du Bois observed in a 1926 essay: “Today in the United States, cheek by jowl, prosperity and depression.
Farmers were stuck with a surplus
A farmer with a chicken, circa 1925.
FPG / Hulton Archives / Getty Images
The speakeasy party culture popularized in books, movies, and magazines was only accessible to a small portion of wealthy, urban, and mostly white Americans. Black Americans and immigrants have faced violence from the recently revived Ku Klux Klan, and the wages of many workers have failed to keep pace with productivity or have fallen altogether. For farmers in particular, the Great Depression essentially began after World War I.
During this war, American farmers increased their food production to feed their European allies. As a result, prices and demand plummeted, and farmers found themselves stuck with an excess supply that they could not sell.
“Exit the war when exports fall, [farmers] get into this very unfortunate feedback loop, ”says David Sicilia, professor of history at the University of Maryland. “Prices are falling and in order to continue to survive, farmers basically react by planting more. So there is overproduction superimposed on overproduction, and they therefore enter into this kind of vicious circle. ”
Overproduction has also become a problem for manufacturing companies. Even though families who could not afford to buy radios, cars, dishwashers and other expensive items in advance could now buy them on credit, the amount of new products produced by companies exceeded still the number that families could buy. One of the contributing factors to this overproduction was the willingness of companies to grow and increase shareholder profits.
Anti-work climate
There was a strong belief under the presidents of the 1920s that putting shareholders’ profits first would create a stronger economy. Chiles says that when New York Gov. Al Smith tried to gain state control over hydroelectric development to give residents lower energy rates, a memorandum from President Calvin Coolidge’s administration s opponent of the idea said it was okay for New York residents to pay a lot for electricity because it increased the price of inventory.
While many factory workers saw their wages increase modestly in the 1920s, these wages did not keep pace with their productivity. Indeed, business leaders gave more profits to shareholders than the workers who made them.
It was difficult for workers to fight for higher wages because “there was a movement in terms of more aggressive enforcement of labor law,” says Mark Joseph Stelzner, professor of economics at Connecticut College. Courts have often ruled in favor of companies (the Supreme Court even struck down a child labor law in 1918). Black workers in the South in particular had little recourse against Jim Crow laws that required them to work for low wages. In this anti-working class climate, the unions were weak and strikes were becoming extremely rare.
Causes of great depression
Calvin Coolidge, former chairman, and Alfred E. Smith, who was defeated when he ran for president in 1928, are seen conversing when they met as members of the Non Railways Committee supporter, c. 1932.
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There were many factors behind the Great Depression, but Sicilia argues that the stock market crash of 1929 was not one of the main ones. Instead, he says, the main drivers were more complex. One of the main factors was the government’s adherence to the gold standard. Another, he argues, is the income inequality that developed throughout the 1920s.
“With increased inequality, you have a much less stable economy due to the fact that the most stable component of GDP is essentially consumption,” Stelzner says.
Many Americans have tried to draw attention to this inequality by arguing that “Coolidge’s prosperity” was a myth. “Prosperity, to the extent that we have it, is unduly concentrated and has not equitably affected the lives of the farmer, the wage earner and the businessman,” Al Smith said when he spoke. accepted the Democratic nomination for president in 1928.
Smith lost the election to Herbert Hoover, who argued that Americans were live prosperity. Shortly after Hoover came to power, the US economy collapsed.
