How real was the prosperity of the 1920's in America?
How real was the prosperity of the 1920's in America?
In the 1920's America was going through a boom, which on the surface looked as if all of society was enjoying it. Prosperity is the advance or gain in anything good or desirable. The boom made many things such as cars, radios; household appliances and electricity viable for everyone yet only a few percent were able to use these new advances in technology, business methods and easy credit to attain the prosperity that the boom seemed to be exerting. Society in America during the 1920's were divided between those who actually had real prosperity, those who gave the impression that they were enjoying prosperity and those who actually showed no signs of prosperity. Because of the Wall Street Crash it is easier to see who these groups comprised of and to see how real the prosperity was in the 1920's or were the majority of Americans hiding behind a façade of prosperity made up of a select few?
Although in hindsight we can see that the majority of the Americans did not have prosperity, there were few in the country that did. There was about 5% of the country who owned 33% of the nation's wealth. These were the elite, the upper class many of whom owned the business which boomed during the 1920's. It also included those who had amassed their fortunes before the boom, such as Andrew Carnegie and John D. Rockefeller, who had invested in what were now called the old' industries. Those who enjoyed the prosperity of the 1920's were aided by government policies which cut taxes so that more money could be invested into the industries and ensuring inflation was kept below 1%, along with high tariffs so that there was an almost guaranteed market for the manufacturing industries. There were also fewer regulations which meant these industries could get away with price fixing and having minimum wage. Alongside this there were technological advances which made it easier for the manufacturing business to produce more goods cheaply. This indeed boosted people like Ford and Chrysler who were clearly enjoying the prosperity that the boom was bringing. With the introduction of easy credit, more purchases were made of these consumer goods and so ore money poured into the industries ensuring prosperity for their owners.
These were the people who were the head of industries, yet there were others who did enjoy the prosperity but because they could afford to buy the new consumer goods and did not rely on all these easy credit schemes. This leads us into another group of people, who, on the surface looked like they were enjoying prosperity, but it was not real prosperity. These people enjoyed increase in wages which gave them the allowance to buy some luxury goods. In that sense they were prosperous, but what they did with the extra money instead of saving meant that they did not feel the full effects of prosperity.
Easy credit enabled people to buy many consumer goods such as cars and household appliances, but the real meaning of easy credit was putting these people into debt as if they could not repay the credit they would lose their good, in sense furthering debt for them. Many also were conned into these 'Get Rich Quick Schemes' such as the Florida Land Boom where many people parted with their money to buy pieces of land which were not good quality for money. This exemplified their naivety and when in 1926 hurricanes destroyed many homes and killed 400 people, ...
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Easy credit enabled people to buy many consumer goods such as cars and household appliances, but the real meaning of easy credit was putting these people into debt as if they could not repay the credit they would lose their good, in sense furthering debt for them. Many also were conned into these 'Get Rich Quick Schemes' such as the Florida Land Boom where many people parted with their money to buy pieces of land which were not good quality for money. This exemplified their naivety and when in 1926 hurricanes destroyed many homes and killed 400 people, many saw what they had fallen into as the price of their land depreciated rapidly. This is a clear example of how many people did not have real prosperity as they were conned into buying pieces of land which had no sea view and were on pieces of marshland, far from the glorious sun drenched beaches. If these places were bought on credit, it meant even more debt as the majority of these people used easy credit as they could not afford to buy it or any goods. These downtrodden people did not lose faith and many in 1927 began to speculate on the Stock Market. Beginning the 'Wall street mania'. This meant that even those who could not afford to buy shares on the market were able to as they could borrow money from their broker who would then buy shares in their name. From the profits that they might earn on the shares, they paid the broker back and then kept any money left over. The problem came when the shares did not increase in price and so the people were in debt. This again showed that many people were not enjoying real prosperity as there were not using their own money and relied on the shares to increase in value.
All these group of people seemed to be enjoying prosperity, but the reality was that many were not. These included groups such as the farmers. During the First World War they enjoyed a boom as they got more sales by selling extra produce overseas to the allies as they could not produce their own food. After the war, there was a fall in the demand for these goods as many people within America migrated north and their diets changed so that they did not eat as much meat and fewer cereals. There was also a decline in cotton as synthetic materials had been introduced. Yet, for this there was an increase in production to 9%. There were new technological advances, the use of fertilisers and better animal husbandry. This meant too much was produced and there was no market for it. It seemed that the government did not do much to help them as any form of help such ad the McNary-Haugen Bill, which would sell any extra produce overseas and the farmers had to pay the difference, was vetoed by the president as it did not address the problem of overproduction,. He also did not want to sour foreign relations by dumping food in their countries and it would be too hard or officials to coordinate it. Although this bill did not pass, the government did pass the Emergency Tariff act n 1921 and the Fordney-McCumber Act of 1922 which meant that there were high tariffs on foreign imports, but this had adverse effects on the exports, so not helping the farm economy. The only real form of help was the Agricultural Credits Act of 1923 which helped fund 12 banks to give loans to farmers, but this helped only agri-businesses who could buy goods in bulk. To small farmers it was more debt. This was the main group of people who did not find any prosperity, but within them were the black farmers who were also hit hard. They were also discriminated because of their colour and so were worse off than the white farmers. Many were also farm hands or did not actually own their farm. If farms had to be closed, many blacks lost their jobs and were well below the poverty line so not enjoying all the consumer goods that could be bought.
The new industries that had become more prominent during the 1920 era were doing much to exploit the 'old' industries such as coal, timber and cotton. It is very similar to the concept today where the new industries exploit poor countries of their natural resources. In America, coal was now being superseded by oil in its energy values and so coal was going into decline. Along with this was cotton, which due to a new synthetic fibre was also going into decline. As the 'old' industries were in the north east, many of the new industries were there for easy access to resources, so geographically people living in the south fared worse. In 1929, the incomes in the north east and the far west were $921 and $881 respectively compared to $365in the south east. In more detail, in South Carolina, non-agricultural sectors of the economy earned $412 to that of farmers at $129. Workers in the old' industries were not prospering as demand for their goods fell and also they were being exploited, working long hours at barely minimum wage. As well with the farmers, government policy meant that nothing was done to help them, showing that it was not prosperity at all.
America was seen as the 'land of opportunity'. This image and the idea of the 'American dream' caused many people to uproot and move to America. The new immigrants did not fare well in America as for jobs they were looked at after all the 'old' immigrants. They also lived in ghettos and had poor lifestyles which were not helped by any measures put up by the government. The reduction of taxes did not help them as the people were so poor that they could not afford to pay tax. The 'American dream' can be seen as a façade that people on the outside saw, not showing how real the prosperity was.
There was also increasing evidence that America had unequal distribution of wealth. A survey by the Brookings institute in 1929 showed that 60% of the country earned less than $2000 a year. Also a survey conducted by the Lynds in 'Middletown' showed that out of 100 families, 72% of them earned less that the amount that the Federal Bureau recommended as the minimum income needed to support an acceptable standard of living. They also found that out of 165 families that they surveyed, 72% were unemployed. Of these 43% had been unemployed for over a month. These figures meant that the majority of the population were unable to enjoy the boom. It was shown that the bottom 40% of the country owned only 121/2% of the nation's wealth, a number showing that real prosperity were for the few at the top of the ladder.
Women were also in the groups that did not have much prosperity. Although the image of the 'flapper' had come about, they still had not got many employment opportunities. By 1930, there were only 150 female dentists and 100 accountants. They usually worked in low-paid and menial jobs; 700 000 women were domestic servants. Women in education had dropped by 5% and few were in top jobs like managing director.
Even lower than these groups were the Native Americans and the blacks. The Native Americans were forgotten as they reminded the whites of the bloodthirsty past. Blacks, who made up 10% of the population, but 85% lived in the south. 145 of these were farmers, and these were the most prosperous the blacks got. These minorities were also discriminated by the Ku Klux Klan who terrorised them. By migrating north, it was thought that they would lead a better life style, but discrimination spread and they were forced to live in ghettos which were worse than those of the immigrants.
Another aspect to discuss about how real was the prosperity is the economy. If the economy was not doing too well then the people were not feeling real prosperity. There were signs that there was a slow down in the boom with small businesses being squeezed out of the action as they could not compete with the big corporations and the government did nothing to help. The construction industry 'flattened' which meant industries that depended on this one 'slumped'.
America on the outside and to a few on the inside did seem like it was going through a boom for everyone. In reality though the majority of those people were not enjoying real prosperity or any prosperity. There were many instances that gave the impression that people were enjoying prosperity such as the Florida Land boom. Easy credit and speculating, but soon enough they were shown to be giving an impression of false prosperity. The majority of Americans did not enjoy any prosperity even though there was an increase in wages and prices remained constant. This was because 80% of the country lived near subsistence levels and so were not capable of buying the goods that were being produce so causing over production and diluting the market.
In conclusion, America did not have real prosperity as that would mean th3 whole country should be prospering rather than the few that did. Also many people were under the impression they were prospering. Once the Wall Street crash, those left standing were the ones who really prospered. However, the majority of the population had no prosperity at all and so meant that America had very little real prosperity. If the boom was to be one of real prosperity it needed to encompass all walks of life rather than the elite few it did.
Ambareen Naqvi 12E Sunday 16 November 2003
Ms. Webb History 1
