The Roaring Twenties Were the 20s really roaring? Were economic outcomes evenly distributed? What social and institutional changes were made? Was the Great Depression an inevitable consequence of the prosperity of the 20s? What were the key social changes? By 1920, more than 50% of the population lived in urban areas Free immigration from foreigners ended; increased demand for immigrants from the South Prohibition Rights and views of women Increase in education See Holt (1977) Who Benefited from the Prosperity of the Twenties? Who benefited from the prosperity of the twenties? The image of America mirrored in Table 1 is consistent with Irving Bernstein s response: The twenties were, indeed, golden, but only for a privileged segment of the American population This was a society in imbalance and workers enjoyed few of its benefits. For what Table 1 reveals is that the prosperity of the twenties was a prosperity of the few but not of the many. More people had access to more goods than ever before 1
1921 annual production: 1.5 million 1929 annual production: 4.8 million By 1930, 60% of families owned an auto Secondary effects: Roads, bridges, and infrastructure Construction and location of homes Complementary goods & services hotels, gas stations, restaurants Consumer credit developed, usually for durables only Advertising was more prominent 1917: national legislation to end alcohol consumption Had widespread support and seen as temporary sacrifice during WWI Volstead Act of 1919 increased enforcement 1920: 18 th amendment 1933: 21 st amendment (repealed 18 th ) Four important trends: 1) Substantial rise in real wages 2) Union membership decline 3) Immigration is restricted 4) Rise in high school attendance Between 1919 and 1929, the real earnings of nonfarm workers rose 23% Except for 1920 21, 21 unemployment was very low (estimated between 3 and 5%) 2
Many factors contributed: Organized efforts against unions Rising real wages resulted in little l need for unions Unions not interested in some industries that were growing What kind of restrictions were imposed? Financial tests Literary tests Formal and informal restrictions against certain countries Returns to education were increasing 3
1896 to 1914 Golden Age of Agriculture After WWI, hard times returned Main problem was debt Land prices rose substantially during Golden Age When prices fllf fell, farmers couldn t support db debt McNary Haugen bills were designed to determine fair exchange values Goal was to preserve pre WWI purchasing power Characteristics: 1) Tariffs 2) Government purchases McNary Haugen twice vetoed but other bills were passed to achieve similar objectives Various studies yield conflicting conclusions: some suggest income distribution was more unequal and skewed toward the top; others suggest distribution was only slightly unequal Taxes were cut, revenues increased, and budget surpluses were common 4
Monetary policy was effective Fed was mostly concerned about borrowing that was fueling the stock market increases In hindsight, more restrictions should have been implemented US was not paying close attention to events and changes around the world; too concerned with itself Germany was a brewing problem Returning to gold standard was not as easy as thought to be The stock market boom is probably what most people remember about the 20s Charles Ponzi Indicative of the mentality of the culture Most important influence: expectations Lesser influence: borrowing 5
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