The Roaring Twenties
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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?
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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
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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.”
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More people had access to more goods than ever
before
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1921 annual production: 1.5 million
1929 annual production: 4.8 million
By 1930, 60% of families owned an auto
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Secondary effects:
Roads, bridges, and infrastructure
Construction and location of homes
Complementary goods & services- hotels, gas
stations, restaurants
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Consumer credit developed, usually for durables
only
Advertising was more prominent
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1917: national legislation to end alcohol
consumption
Had widespread support and seen as temporary
sacrifice during WWI
Volstead Act of 1919 increased enforcement
1920: 18th amendment
1933: 21st amendment (repealed 18th)
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Four important trends:
1) Substantial rise in real wages
2) Union membership decline
3) Immigration is restricted
4) Rise in high school attendance
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Between 1919 and 1929, the real earnings of
nonfarm workers rose 23%
Except for 1920-21, unemployment was very low
(estimated between 3 and 5%)
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Many factors contributed:
• Organized efforts against unions
• Rising real wages resulted in little need for
unions
• Unions not interested in some industries that
were growing
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What kind of restrictions were imposed?
• Financial tests
• Literary tests
• Formal and informal restrictions against certain
countries
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Returns to education were increasing
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1896 to 1914 “Golden Age of Agriculture”
After WWI, hard times returned
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Main problem was debt
Land prices rose substantially during “Golden Age”
When prices fell, farmers couldn’t support debt
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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
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Various studies yield conflicting conclusions: some
suggest income distribution was more unequal
and skewed toward the top; others suggest
distribution was only slightly unequal
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Taxes were cut, revenues increased, and budget
surpluses were common
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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
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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
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The stock market boom is probably what most
people remember about the 20s
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Charles Ponzi
Indicative of the mentality of the culture
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Most important influence: expectations
Lesser influence: borrowing
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© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain
product or service or otherwise on a password-protected website for classroom use.