Unequal distribution of wealth led to the Great Depression. Her class is about 75 minutes. Weve spent the last few weeks considering how americans adapted to abundance between the 1890s and 1920s. Despite the efforts of producers, advertisers, of retailers and of others, the supply of goods continue to outstrip demand. This wasnt because all everyone, all 106 million americans, had everything they needed. It was because they didnt have adequate purchasing power. They didnt have adequate wages or income to buy all of that stuff. And it wasnt just americans who were in this situation, but so too were our trading partners around the world. They didnt have enough income to buy all of the commodities we were producing in our fields and all of the wonderful things that we are our factories were making. So by the end of the 1920s, the American Economy went bust. You guys all know this. You all know that the stock get crashed in 1929. The World Economy went bust as well. A worldwide economic depression set in that lasted between 1929 and wasnt officially over until 1942. What was called the Great Depression could be considered a crisis of abundance. It brought attention to purchasing power and in doing so, it ended up politicizing consumption. We talked a lot about how consumer culture roads to be at the very center of american culture. I keep telling you that we need to consider politics. Today is the day that we will think about how consumption became politicized. So here is a graphic that typifies the usual story that historians tell about the Great Depression. This is a story that im sure you guys have all heard at one point or another in your junior year of high school in your American History class, if youve had other American History classes. Heres the typical story that is told. In each of the bubbles in this graphic does bear some of the burden for the catastrophe. However, i want to focus our attention on the bottom to bubbles. On the unequal distribution of wealth and on over production. I want to show you how the relationship between those two brought on what we can call a crisis of abundance. Due to World Historic levels of agricultural and manufacturing productivity, weve talked a lot about those, in age of abundance had arrived in the United States by the 1870s. The shift from an economy of scarcity, which we talked a lot about, to an economy of abundance entailed what we identified in this class when we started reading susan stressor, satisfaction guaranteed, entitled a crisis of distribution. So much was being grown and so much was being made that not only were the logistics of getting good goods to market difficult, but finding new markets became imperative. And so i ask you, just as review, what were some of the things that gilded farmers and producers . What are some of the things they did to solve this problem of overproduction, to find new markets . Yes. Yes, sam. Today the differentiation with name brands and any type of description on the packaging. Okay, right. Product differentiation. Name brand, packaging. What else besides what sam is just listed for us . What else did they do to find new markets . Get rid of retailers and filled a different connection to consumers. That is very good. Thats right. They try to pass over the wholesaler, the retailer and go right to the consumer. What else . Theres so many things that we talked about. So we do talk a lot about the shift from production driven marketing to what kind of marketing . Yes, logan. Market driven production . Right, marketing driven production. We see right here in this slide a great example of marketing driven production. Which item on the slide typifies marketing driven production . The chris go, right . The chris go. The barrels of flower typified production driven marketing. Then we see that label, bobwhites self rising flour. That typifies the branding and packaging and differentiating products. So these are a number of the things that producers, the steps that they took in order to try to find new markets for all of the commodities they were growing and all of the goods that were being made in factories. But despite these incredible efforts, right . Weve learned a lot about them. To find and identify new markets. Neither domestic nor foreign markets could absorb everything that was being grown and made in the u. S. Americans and foreigners just didnt have sufficient purchasing power to buy everything that was for sale. So the First World War rolls around and delayed reckoning with this problem of overproduction. During much of the 1920s, there were slight increases in purchasing power and thats david off reckoning with this problem of abundance and as well. World war i states off the reckoning with the problem of abundance. Then the 1920s, slight increase in purchasing power and puts the problem off a little bit longer. But because prosperity didnt lift all boats sufficiently, at the end of the twenties, the crisis of abundance erupted. This time generating more demand was impossible. It was impossible to differentiate products even further. Weve talked a lot about that, right . All the efforts advertisers went through to add some kind of value to their product. But at a certain point, there are no new markets to be found. Theres no new demand to be generated. Americans wanted everything as far as i can tell, but they just didnt have enough money to pay for it. They just didnt have enough money to pay for it. So let me first remind you about the economic boom of the 1920s. We havent yet put some numbers to that in this class. Weve looked a lot at the advertising of the 20s, but we havent talked a lot about the economic boom itself. I will just give you a little bit of information about it. At the start of the decade, at the very beginning of the 1920s, right at the end of world war one. The world war one and in november 1918. At the beginning of the 1920s, the u. S. Held 40 of the wealth in the entire world. We were officially the richest nation in the world at that point. And over the course of the decade, our Gross Domestic Product increased 40 . So eight it increased 40 between 1920 and 1929. This was because agricultural and manufacturing productivity nearly doubled. It nearly doubled in less than ten years. So the number of telephones doubled from 10 million to 20 million. The number of automobiles tripled. The number of radios increased from 60,000 to 10 million. Part of the 60,000 is those 90 20 radios were mainly for amateurs. Whereas by 1929, Everyone Wants a radio. They are a widespread consumer good. Nevertheless, it is an incredible increase in productivity. From 60,000 to 10 million. And there were 160 times more electric refrigerators in 1929 as in 1920. Not only did productivity double over the course of the 1920s, so did well, so did prosperity. So lets look at prices. Lets look at prices for a minute. I think weve talked about this before, but let me remind you about what the Consumer Price index is. So the Consumer Price index is probably something you here in the news or see in newspapers often abbreviated to cpi. Cpi is a measure of what a Market Basket of basic goods would be. It could be butter, eggs, bread. Something that an ordinary family, almost all of us would buy. Its what that might cost at any given moment. It is taken as a measure of the cost of living. You can see from this graphic here, that during and shortly after world war one, prices increased. They increased pretty dramatically. They increased by as much as 60 . In the post war period, immediately after the war, that big drop there, that was due to a post war recession. Prices plummeted. They plummeted well below 1914 levels. Been through 1924, the prices steadily increased. Then theres a little rise until 1926 and then they level off and begin to move downward by the beginning of 1929. If we look at the increase in prices over the course of the 19 1920s as a whole. From 1919 to 1929, we see an up and down, but as a whole inflation was only 1 . It is a very low rate of inflation in the 19 1920s. But between 1900 and 1920, the rate of inflation was extraordinarily high. So 1900 to 1914, prices increased by 17 . Then 1914 to 1919, in five years, prices increased by 60 . So although americans in the 1920s experienced a relatively flat rate of inflation, which is good for purchasing power. Over the course of the three decades from the beginning of 1900, the cost of living did increase. It doubled more or less. So the price of rent, the price of food, etc, doubled. Now if we look over here in the corner at the price of the model t, you see a slightly different story. You see another trend. That is what . What is the price of the model t do . It goes down. Right, it goes down. It dropped pretty precipitously, right . And why is that . What happens in 1913 that brings the price of the model t down . Right, the moving Assembly Line brings the cost of production down and therefore the price. What we see over the course of the 1920s is that automobile prices were not the only ones that dropped. The automobile prices were dropping, so the model t and the price of other models for sure, there were luxury items whose prices increased. But as a whole, automobile prices are dropping and prices for other durable goods are dropping as well. Things like refrigerators and radio sets, their price is decreasing over the course of the 1920s. Also the price of semi durable goods like clothing and shoes, all those semi durable goods, their prices are decreasing as well. These were precisely the goods, these are exactly the things that were featured as elements of the good life. We read the great gatsby first class on tuesday. Clothes and shoes and automobiles and telephones are featured as part of the life of these very rich people, right . These items are not only featured as part of the lives of very rich people, but part of the good life that ordinary people should seek to obtain. So they were featured in magazine stories and advertisements and songs and movies. They were the nissan sign of the good life of what americans should aspire to. We see these items, these expectations for owning these items being lifted by Department Store show windows. By advertising, by scenes in movies, by the lifestyles of celebrities. Now when we talk about prices, what we are talking about is the cost of living. Right down prices, cost of living. But when we talk about expectations, when we talk about expectations, what we are talking about is the standard of living, right . So prices, cost of living, expectations, standard of living. The standard of living in the 1920s was on the rise. This new standard of living was beckoning americans to buy more, to identify new needs, new habits, and most of all, to want more. The threshold of desire was rising. Now, let me be really clear with you. Many americans, most americans, had to make due with out electric refrigerators. Without automobiles. Without colorful house traces or matching bathroom towels. Or all of the things that weve looked at and thought about. Increasingly though, these luxuries were coming to be considered decencys. So the shift from luxury to decency. And as decencys, they were coming to be considered the birthright of all american citizens. Something that all americans had a right to claim, jewish for, to want. So lets think about this. So despite historic levels of economic productivity, we have historic levels of economic productivity, we have decreasing prices, we have a rising standard of living. But Many Americans were forced to live on the edge. They were making due. They were like George Wilson who you see here from the great gatsby. They were living in the at heaps, right . Now theres a lot of disagreement, no scholar has figured out exactly how Many Americans were living in poverty during the 1920s. There wasnt an official bureau charged with a collecting official no official agreement today what constitutes living in property, or living out of it. So ive looked and i have seen some scholars estimate that 70 of all americans live in poverty, in the twenties that would be seven out of ten americans. Others say it was only 20 , that would be two out of ten. I think both those estimates are extreme, extremely high and extremely low. I think the best guesses about one third. About 30 , 33 , about a third of americans were living in poverty. Living lives of real privatization, of real economic difficulty, in addition to those numbers, those people. Another 20 or so were probably near the line, maybe they were above poverty but it was pretty rough. It was a struggle, life was a struggle for them. So, what do you notice from his wage chart. What do you notice . How do the farm workers wages look . Logan . They look similar to the unskilled workers, but theyre based on seasonal work, and the per year total is significantly lower than the unskilled workers. Right right, so you see their yearly total is 357 dollars, down to 294 dollars. Thats poverty, those are poverty wages. Its estimated in the 1920s, im not sure whether i agree with this, but its estimated that it took about 2500 dollars a year for a household to live a dig decent standard of living. So we can see even, with a skilled workers, these are not this is an easy time for them. Although 1500 dollars seems a lot better than 300 dollars a year right. Anything else you guys notice from the wages . . Are they going up . For some right, and then they kind of flatten out right. If we were to take these wages, and compare them to productivity, productivity doubles and the space of ten years, but the wages, have the double do they double . No not even close. Not even close. So wages are not keeping up with the productivity at all, there are not and what this suggests is that working americans were not receiving a significant or a fair share of the wealth. That the distribution of the wealth thats being generated by this massive amount of productivity, is perhaps unevenly spread out. So lets think a minute about the distribution of wealth. Its probably something youve guys ive heard about, its in the news a lot today, the distribution of wealth. So, in the 1920s the top 1 , weve all heard the term the 1 , its become a very popular term in our day. The top 1 held about 24 of the nations wealth. The top 1 holds 24 of the nations wealth. Lets take the next 9 . We have the next 9 , it held 26 of the nations wealth. So the top 1 has about a quarter of the nations wealth, the top 9 or the next 9 have a quarter of the nations wealth. As the whole the top 10 cold 51 of the nations wealth, so they hold the majority of the nations wealth. And then, lets look at the bottom 60 so the bottom 60 of americans held 5 of the nations wealth. 5 , and that other 30 in between, that bottom 60 they held the rest. They were doing pretty well, they held about 45 of the nations wealth 44 . So, this is an incredibly unequal just rub you shun of wealth, in fact at no other time in our nations history, except for right now has there been as much inequality. Has a wealth been distributed so an equally. And were not a contemporary history class so we dont need to think about the present moment, we will consider the 1920s here. But the distribution of wealth was incredibly unequal. And so as a prominent intellectual and activists, named w. Evade the boys, do boys observed in 1926. Hes looking at the situation he didnt have access to the statistics i laid out for you hes looking at the situation its clear to him that something is very wrong he observes and this is a quote from him, we have today in the United States cheek by jowl prosperity and depression. Cheek by jowl just like this African American news wife, hes selling a penny newspaper and the penny newspaper headline is proclaiming attacks on billionaires. A descent over the billionaire tax this is from 1921. Chic by dual prosperity and depression not only African Americans like this young boy and most other African Americans, and other minorities impoverished. So to reformers and they made up about 30 of our population so too were coral miners and unskilled laborers. So, we have a vast proportion of americans who are essentially impoverished. And so despite the slow rate of inflation in 1920, we looked at this distribution of wealth, despite the slow rate of inflation. Most americans did not earn enough to buy the necessities, and they did not earn enough let alone the decencys are any luxuries at all. So this is the situation right, that characterizes the 1920s, so heres the situation. You have incredibly high levels of economic productivity, you have rising consuming expectations, but you have wages that dont match the pace at all. Right, so up goes productivity but wages are flat, and in some cases going down. So what did americans do about this . What did they do about this . Okay, so let me make some generalizations right first, about how individuals and communities handle it when they cant pay for their needs and their once. Just for a moment, you might think about this yourself, what do you do when you cant pay for what you need . What do you do when you cant pay for what you want . What are you or what are some of the strategies your college students, i bet you want many more things than what you can pay for. Maybe you need some things that you cant pay for two. What might you do . You might substitute with other products are items, or you may go to stealing. You might steal, you might substitute okay right good i like these ideas. Takeout alone. You can take out a loan right, get some credit. Get a credit card ok. What else might you do . Like move in with friends, like saving in that sense. Okay so you can, budget cut caused by pooling resources. Share a textbook, move in with friends. Share a car, take the bus you can economize and all sorts of ways. So weve got taken out loans, we have stealing, we have economizing. What else . You could work more. Presumably like minimum wage kind of thing. Yeah you can get another job babysit right, you could tutor you guys are smart. There are so many kids in this town who need tutoring. You guys could tutor, you can babysit you could take a minimum wage job if youre over 21 you can portend. Wait tables right, theyre all sorts of things you could do to add to your income. Now, henry and logan suggested ways of economy, saying of sort of trying to substitute to try and stifle your demands right. You could eat less right . When i was in my first year of graduate school, i didnt have a lot of money so i ate a lot oframa neutrals. So you know you can limit your expenditures, your desires, your wants your needs. You can figure out how to do that. So what you guys what we just sort of laid out here, these are common sense strategies, there is nothing new about how you might come up with come up with making ends meet. And this is exactly what americans have been doing for a long time, so let me summarize for you, theres one thing you guys did not mention. That americans started to do, and thats trying to control prices. So the first thing you might do if if your needs and wants if your income doesnt meet what you need or what you want, you could protest prices right . You could engage and collective action, to try and prevent inflation to try and prevent rising prices. So thats the first thing ok write that down. The second thing you can do, which you guys have sort of indicated, you could try and stifle demand right . You could try and make do, try and spend less, you could try to expose yourself less to all of those stimulant that make you want things. You could stop internet shopping right for instance. And then the third thing you can do, and this is to taking out a loan or getting a job as someone suggested, you could try to increase your purchasing power. You could try to add to your income. So what did americans do in this period before 1900 and 1930 . I think it would be pretty obvious that in the 1920s, americans were not trying to control prices. Prices if anything were going, down so theres no reason to try control prices when theyre not going up. So theyre not trying to control prices in the 1920s, in fact for the most part they were really relieved that that wartime in the inflation of 60 was over. And they were relieved that prices had returned to prewar levels. We dont see any protests, but this stands in contrast to the period between 1900 and world war i, so 1900 to 1915 or so, americans protested price hikes and all sorts of interesting collective actions. So for instance, they rioted, they rioted when the price of food got to be too high. They boycotted, so for instance, housewives boycotted butchers because the price of meat had risen so high, that housewife said were not gonna buy it at all. It was not just an individual boycott, thats fine if i choose not to buy me it means nobody is going to change the price of meat right. But if all of us and dallas said, were not buying meat until you decrease the price by 25 , we make it through to them right. And so this is precisely what housewives did in 1908, 1909, they boycotted butchers to protest the high price of meat. And then heres one that maybe will inspire you, they refused to pay the rent, and these recall rent strikes. Now irans strike only works, if everyone in the building refuses to pay the rent right. Easy for a landlord to kick me out and find another ten and if i dont pay my rent, but if all of us did not pay our rent, the landlords going to have a hard time finding 28 people to sell all of those apartments. So iran strike might be effective, again with collective action. So these are the sorts of things that americans did do when prices were rising out of control, at the same time, the government during world war i during the war, the government recognizing the inflation was out of control, and that there was going to be writing in worse if they didnt bring it under control. They put prices controls on food and on fuel. So there were some government regulation of prices, okay so, were talking about how to balance and calm with needs. So we talked about controlling prices, no need to do so in the 1920s. What about controlling demand . What about controlling demand . So, stifling expectations, spending less, hardly requires collective action right . It hardly requires strikes, boycotts, and riots this is more of an individual response to the problem. So most americans, i would argue, except for maybe jay gatsby and daisy buchanan, stifled their Consumer Expectations they stifled their desires to one degree or ordain other. They didnt just buy everything they wanted, they didnt buy a new refrigerator every year, or a new automobile every year. Let alone all those other baubles and gadgets that were becoming available. But americans didnt engage completely in self denial either. Instead what they did, and this is what you guys indicated when we started talking about. This is they stretch their dollar, they were creative, they were ingenious in ways to stretch their dollar. They made their own food, they made their own close so we see here pattern from the mid 19 twenties, many women made their own dresses make clothes for their children, they sewed their own clothes. Trying to be a la mode in the fashion of the day, nevertheless making the close rather than going to Department Stores and going to buy ready made clothing. They made their own food, they can their own tomatoes, they can their own vegetables they needed applesauce. They put them away for the winter and engaged in thereby didnt have to buy the hines canned tomatoes or all of those other canned goods that were available at the ap. Americans safe and they budgeted. There was a tremendous interest in household budgeting during the 1920s. They traded and bartered. They traded eggs for a homemade dress. They bartered. They traded services amongst each other. Sometimes they resorted to stealing. They also bargain shopped. They went to Second Hand Stores and bought things on the black market. These are just a few of the ingenious ways that americans tried to stretch their dollars. But it did not work, it did not work entirely, because theres only so far you can stretch something. And so americans began to look for ways to increase their purchasing power. So they moved away from trying to control price, trying to control demand, and they try to take care of the other side of the equation, which is purchasing power. How can we increase our income . So they tried to get paid more. They changed jobs. They quit working in a gm factory and went to a ford factory. Why ford . Because he paid five dollars a day which in 1914 was twice the wages of all other automobile factories. 1920s saw the daily wage increase to six dollars a day. Interesting really, after the stock market crash and the market went into decline, ford raised the way to seven dollars a day. He of course laid off many workers, but those who were lucky enough to keep their jobs and seven dollars a day. Ford understood that without purchasing power, there would be no market for all of those automobiles. All of that stuff. Now there were other ways that you could raise your wages besides working for ford or finding a higher paying job. You could raise your wages by unionizing. Unionizing is another way of engaging in collective action. I go to president turner and complain about my salary. That wont make any effect, right . He will entertain me, but its not going to change my salary. If i say im not going to teach classes anymore until you give me a salary increase, that is not going to do anything. But if all the faculty engaged in collective action, we would likely see an increase in our salary. Just as if all of you had engaged in collective action, you would probably see a decrease in tuition. This is airing on national television, so here we go. Ive now called for collective action. Okay, the point is that unions give laborers more Bargaining Power than when a labor stands by himself or herself. So americans formed unions and went on strike. They went on strike after world war one. Prices were so high, but their wages actually did not match the price increases and so they went on strike between 1919 and 1922. There were a lot of strikes between that time. That is because wages did not match the pace in the increase of the cost of living. For the rest of the 1920s however, we see very few strikes. Very little in terms of collective action. So you can try to get a higher paying job, that would be one way to increase your income, right . Another thing you could do, so you cant get a higher paying job, is you could send more members of your household down to work. Right . You could send more members of your household out to work. You could send your children and wife to work. You yourself could take extra jobs. So instead of working one job, you might work two jobs or three jobs. You take an extra job. You could do side jobs. You could engage in criminal activity. You could bootleg, you could smuggle, you could engage in the black market, right . All of these things may increase your income, your household income. You will try to increase your individual income, your household income, and then theres a third thing you can do. This is what amelia suggested and this is definitely the american way by the 21st century. That is that you can take a loan. You can borrow money. All of these things americans engaged in. Lets look backward for just a minute. I want to introduce you to an important concept. This is the concept of pocketbook politics. I think it is in i. D. Term. If we look backwards at various moments during the 19th century, so during the 1800s, at various moments, americans protested high wages. They did not protest high wages, i misspoke. They protested high prices and low wages. So bread riots for instance. Many strikes, maverick walkout strikes in the late 19th century, were directed at these problems of high prices and low wages. But usually, the activism in the 19th century, the activism in the 1800s was directed at employers or at merchants. So it is directed very directly at whomever was paying the wedges or wages or setting the prices. It was not directed at the government. The activists did not watch march in washington d. C. And ask the president to raise wages or lower prices. It did not occur to them that there were Political Solutions to these economic problems. They sought instead Marketplace Solutions for their economic problems. This is the 19th century. But around 1900 or so, americans began to demand Political Solutions to economic problems. They began to demand Political Solutions to economic problems, and this is what we call pocketbook politics. Political solutions for economic problems. Limitations on purchasing power are what pushed americans to demand Political Solutions to economic problems. They began to ask the government to control inflation, to regulate wages, to ensure access to basic living standards. You guys can immediately think of the measures that our government takes to this day to do those things. To control inflation, to ensure access to basic living standards, that is what welfare and food stamps are, right . As well as to regulate wages. But in 1900, these were unheard of actions for the government to engage in, but americans began to ask for that kind of government involvement. So as a historian, meg jacobs has shown in her book, pocketbook politics, the United States, these kinds of politics entered the american political arena in the early decades of the 20th century. But what happened to pocketbook politics in the 1920s . What happened to them . Well, in the 1920s pocketbook politics were dormant. They were not to be seen. This is in spite of the fact that as Calvin Coolidge famously said, the business of america is business. But that is exactly what coolidge meant. I mean he meant the business of america as business. He did not mean it was taking care of consumers. It wasnt to make sure that people had adequate wages and incomes. Americas business was business. They help american businesses find markets at home and abroad and helping them become more efficient and helping them a damped Scientific Management to become more productive. The business of america was business. You and so it did not concern, the government did not concern itself with purchasing power. As i said, americans did not engage in collective action. There were hardly any strikes, there were no protests and there were no communal efforts to make up for this difference between wages and wants. So we just sort of muddled the line during the 1920s. Now the dorman sea of pocketbook politics in the 20s was due in part to the slow rate of inflation. You have a slower rate of inflation, the people cant complain about rising prices. It was also due in part because Consumer Debt became more widely available. So Consumer Loans rather became more widely available. Consumer loans became more widely available. And as you can see here, over the course of the 1920s, Consumer Debt nearly tripled. You have 3. 3 billion in debt in 1920. This Consumer Debt includes home loans and mortgages. By 1929, it is 7. 6 billion in debt. So where did americans get their loans in the 1920s . Who lent them money . On your hand out ive included this list for you, but lets just talk it through for a moment. Who lent them money . Credit, like always, it is always available from family and friends until youve tapped those markets out, right . So family and friends. Secondly, pawnbrokers. Americans frequented pawnbrokers and received small amounts of credit. There were also small loan lenders. A small loan lender is sort of the payday lenders which are so prevalent today. They make small loans, garnish your wages in order, with very high interest rates. Manufacturers also offered Consumer Credit and they did so with installment plants. So if you wanted to buy an automobile or a piano or a kind of durable good, when electric appliance, a sewing machine, a bicycle, you could buy it with installment credit. Fifth italy, retailers offered credit. They began to offer charge accounts for the wealthy. You see here on the slide, a budget account from a leading Department Store in philadelphia. It was the needs of philadelphia. In order to encourage wealthy clients to have charge accounts they used the term budget account, to make it seem like something thrifty and worthwhile and something good. A budget is good. Credit, right, that. So they called it a budget account rather than a credit or charge account. A department Department Stores began to issue charge plates that looked like dog tags to wealthy customers. So they could use them without having to go through the labourious process of calling the finance department and so on. So retailers are offering charge accounts for the wealthy, and they are also offering installment plans for everyone else. These installment plans sort of took the shape of lay away. Do you guys know what lay away is . Yeah . So you identify a pair of hiking boots that you really want, but you dont have enough money for them. You are worried that they are going to sell out so you put ten dollars down and a hold on to the hiking boot cuts in the store until you pay them off. Each week, you pay a little bit more on those hiking boots and then once you paid them off, you get to take them home. That is really different than the way we buy hiking boot today, right . How do we buy hiking boots today . We go to the store, if i dont have any money in the bank, what do i do when i find those boots . Put it on your credit card. I just put it on my credit card and get to take them home, right . Its a different type of relationship. Its credit, but its a different kind. Lay away was prevalent through the 1970s 1970s. Do people still do it today . Is there still lay away . Yeah . What did they do it for . Large purchases. Generally at big stores like target or walmart, i think they will offer that to you. Do they hold on to the goods until you pay it off . I dont think so. I think they give it to you maybe with the assumption that you paid back. Right, so its a different kind of relationship again, between the retailer and the shopper. So we have the last source of Consumer Credit which would be banks. Banks offered Consumer Loans for the wealthy. Again, very wealthy people could go to a bank and get a loan to make consumer purchases. The rest of us, no. The bank is not going to give me a Consumer Loan in the 1920s. But banks also offered mortgages. So there is a lot of different sources of credit in the 1920s. But nevertheless, Consumer Credit was not available to most americans. So most of this credit, except for the pawnbrokers and the small loan lenders, that would have been credit issued just to get people buy for the next week, but most of the rest of the credit would only have been available to the top quarter of the american population. An economy as productive as the American Economy just could not go on this way, right . With 60 of americans getting 5 of the wealth. With wages flat. With credit available, but not widely available. Not available to everybody. The economy needed to find a way for more americans to become full fledged consumers. Now we are back and i brought you to the point where we can think about the Great Depression. Where we can think about what happened. Im fairly certain you guys can figure out the answer at this point, or the answer that im proposing. The answer that makes sense for our class of the history of consumer culture. The Great Depression was a crisis of abundance, it was a crisis of abundance. We, the United States have figured out how to grow and make a tremendous amount array of things, we can make so much stuff and so many different things. And we figured out how to market these goods, we figured out how to literally get them to market, new forms of retail, we figured out new kinds of advertising. We figured out how to market these goods, but the one thing we had not figured out yet is that kind of third leg in the stool, was how to provide americans with the means, to which defy all this stuff. Figured out how to make, it figured out how to get it to market, but we had not figured out yet how to give people the means to buy all this stuff. And this at core was a political question right . This is a political question, its a question that socialists and communists and marxist had been asking since the late 18 seventies. Theyve been asking this question since the 1870s, and they continue to ask it to the end of the 20th century. Revolutions were premised on this question of how to get people adequate purchasing power. The mexican revolution in 1910, the Russian Revolution in 1917, so this political question was being asked. But the answers that socialists and communists and marxist were giving, were not an answer that americans would want to give. Were not just going to dismantle the capitalist system, we liked it the way it was. So american Political Parties had to figure out how to address this question and maintain private enterprise. So lets look again here, lets look at the glut of commodities and manufactured goods. So farming, farming had been in a depression since the end of world war one, they had been in a depression just as terrible as what we would see in the thirties. Since the end of world war one, and this is because during the war, during the First World War, farmers expanded acreage and expanded production because there was so much demand for american agriculture commodities. As you can imagine, with all of your engagement war there wasnt a lot of room for them to grow the crops. So there was tremendous demand for our commodities, prices went up about 60 increase in prices. Which is so terrible for the american people, but pretty awesome for farmers right. Theyre selling stuff for tremendously more than they had at the beginning of the war. But what happened was, the war is over, and the farmers didnt cut back on production, in fact they continue to expand the they continue to put more acres and cultivation, to improve methods of cultivation. They continue to mechanized, all of these things are that are gonna increase productivity. As a consequence, theres a glut of agricultural products, of agricultural commodities, wheat, butter, milk, pork sold for half as much in 1929, half as much as they had in 1914. Not a good situation to be in, if your former. Terrible situation. There was no amount of branding, no amount of packaging, no amount of marketing that could have raised the price for agriculture crew agricultural products. There were just too many. Now manufacturing was a little better off, there wasnt a glut of Manufacturing Products until the second half of the 1920s, but then beginning about 1927 or so, inventories of manufactured goods began to accumulate as well. There were signs as we know, as early as 1925 of oversaturation, remember in advertising the american dream, he talks about how saturation was leading advertisers to more and more desperate measures. So there were signs that inventories were beginning to accumulate, as a consequence in 1927, businesses did begin to slow production, they did begin to lay workers off. And they did begin to cut wages, but the signs of the slowdown were ignored, the signs of the slowdown were ignored, and thus a disaster was in the making. By early 1929, it was clear that the u. S. Was experiencing a crisis of abundance. Were how warehouses were full of automobiles, full of radio receivers, refrigerators, watches, clocks matching towel sets you name it. Warehouses reform, bails of cotton like the ones you see here, filled the shades waiting to be spun into thread, made into cloth. Back rooms of stores were stacked is dealings with unsold inventory, cattle and livestock crowded pans youre not going to take your cattle to to the slaughterhouse unless theres a market for it right. The cattle, the pens crowded with capitals and with livestock, and they needed to eat right, so they have to continue buying feet for them. Grain silos were at capacity, and so the problem of distribution has reared its head again. This could just describe the 18 seventies different products, but the same kind of problem of oversupply. As ive said, americans are all too willing to buy but they didnt have the purchasing power. And did neither did our trading partners in latin america and europe. They had even less purchasing power than americans. So this is early 1929, now, some observers had notice signs of this trouble. Signs of these problems before 1929, but it was only in late october that it became clear how deep the trouble was, how bad the situation was. So the market begins to slide in early october, it begins to slide in early october. Really interesting story, its not really important for this class, but ill give you a little tiny snip it over the, it begins to slide in early october. You can see kind of daily losses in the stock market, then in mid october, the london stock market crashed it collapsed. American traders began to sell off their holdings frantically. They were various actions taken to try and prop the market up, but on monday october 28th, the market lost 30 of its value, and then the next day it took another beating losing another 12 . So in two days, it lost 25 of its value. These are known as black monday and black tuesday. Black monday and black tuesday, they were historic days, talked about, storied days in American History. Ironically for our purposes today, 30 years ago today october 19th 1987, 30 years ago today, the market lost more, it lost 23 in a single day. You guys were all you werent even born yet probably when this happened. But 23 in a single day. In 1929, as a 1987, the market was overvalued. There was a lot of speculation, and there was a lot of whats calling buying on the margin, buying socks without, with only 10 . Putting only 10 down, and then hoping youd be able to sell the steps top off at the higher price and you bought it for, pay that little loan off and walk away with some profit. Thats buying on the margin. But heres the thing, markets overvalued, people are buying on the margin, it seems like a terrible thing, certainly was a terrible thing. But only 10 of americans were actually in the stock market. So the crash of the stock market, would only have reverberating effects on them, they were not directly affected by it. Its crash moreover was a symptom of economic collapse of economic weakness, it was not the cause of it. So we often when we talk about the Great Depression because of the collapse of the stock market is so dramatic right, its such a great story we tend to tell the story as if the stock market collapse caused the Great Depression. But it didnt, it was a symptom of this deeper underlying problems. And it exacerbated the problems. What are these, lets see how im doing on time, the Financial Sector was unregulated. And because it was unregulated when the market collapsed loans were called in. So all these loans are called in, but nobody has any way to pay their loans off, their runs on banks, and the banks collapse altogether. Banking was unregulated idle, a bank didnt have to secure its deposits and anyway, and so as a consequence, 9000 banks collapsed altogether. Im showing you here a paper from a mortgage, called the balloon mortgage issued in 1928. In addition to the financial panic, caused by the crash of the stock market, and the failure of the banks, there was a tremendous lack of diversity in the economy. The economy was over invested in automobiles as you see here, it was over invested in automobiles, over invested in construction. And, it had very weak sectors, so they were very weak sectors of our economy, farming obviously was a tremendously weak sector right. Textiles were very weak, and mining very weak sectors of the economy. And so this lack this over investment in certain industries, and these very weak sectors, meant that the economy was vulnerable when the crash came. And now were back to those big inventories that have piled a, no one was spending, americans consumers were saturated or they were for. There was no amount of super advertising or competitive copying, or increase emphasis on fashion that were going to solve the problem this time. Okay, so, the Unemployment Rate began to rise after 1929, after the stock market crash, but interestingly, Consumer Debt did not soar. In fact, people begin to pay off their loans, and what was discovered is that in bad times, people borrow less not more. This actuallys a pride, it spurred the development of Consumer Credit, spurred their legitimize a sing of Consumer Credit, and it allowed in 1930, and then after world war ii, the vast expansion of Consumer Credit, when it was realize that people would try as hard as they could to pay off their loans. And in fact, the installment loans that americans had taken out and they were still open, in 1929 and 1930. Americans worked very hard to pay those loans off, there were very few defaults on installment loans. It was only one sector of the economy which there was a lot of defaults, and terms of Consumer Credit. Which sector . Pardon . Okay so farmers definitely did the fault, what kind of loans did farmers and others default on . Largely because the balance was so big, they defaulted on mortgages right. Elaine good, they fought defaulted on their mortgages, actually because they couldnt pay them off, they couldnt come up with a 25,000 dollars to pay that loan of. Unlike our loans today, our mortgages tend to be for 15 years or 30 years, and at the and you paid your whole house off. These loans were for shorter time periods, and they tended to be a large balance do at the end of the long period, and you would just refinance it. But nobody could refinance their loans, so there were huge defaults on the mortgage sector. But all the other sectors it defied expectations, people pay their loans off. So the economy grinds down to a halt ok, you have high rates of unemployment and things only went from bad to worse, so the Gross National park decrease by 30 , unemployment goes up to 25 , which is fall if youre lucky enough to keep your job wages fall. Banks fail, 100,000 businesses fail, construction starts to drop about 70 , corporate profits from ten billion to one billion, its a bad time very bad time. Interestingly, with all of this, interesting ugly, prices did not drop, they didnt draw very fast. Prices held steady, which is very interesting and is part of the reason why were going to see the pocketbook politics come back to the life in the 1930s. , after the economy collapse the nation lived along, hoovervilles like this one popped up all over the nation. Americans responded to the depression in all sorts of different ways, they hit the road, they migrated out of the dust bowl, out of the south. They stopped getting married, they stopped having children, they stop going to college. They economize, they bargained hunted, secondhand shopped, they stop spending and they became politicized. Americans became politicized, they saw Political Solutions to their economic problems. Pocketbook politics came of age, so in the last bit of class i want to take you through what these pocketbook politics look like. What do they look like what was the shape that they took . Its no surprise that all, i think anybody could have been elected in 1932 over herbert hoover, so its no surprise that all that the democrat roosevelt was elected in a landslide in 1932. With fdr at the helm, the United States government sought to address the crisis of abundance, and its sought to save capitalism. That was their goal, to save capitalism and save democracy, and they sought to do it with something called a new deal. And the new deal was a huge huge, array of legislation. The belief wise, government legislation could solve problems, and the new deal was a soup of legislation that we could divide in three categories. The three are, you will remember this, relief, so there was legislation that was meant to provide relief to people. Immediate relief, there was legislation that was meant to hasten recovery, recovery of the economy. So relief, recovery and reform. So there was legislation meant to reform the economy, so that these problems wouldnt happen again. In the very earliest years, so fdr is elected in november 32, hes not a knock curated till march of 1933. And the very earliest years of his administration, new dealers, thats what were gonna call the people who work for roosevelt. New dealers encourage placing limits on production, think about this. One of the causes of the Great Depression, and this economic collapse was this incredibly high rate of productivity. Remember how we talked about in the gilded age efforts to limit competition, to control supply. Right monopolies are formed, trust our foreign, pools are form as a ways for producers amongst themselves to agree what cap productivity. So that they could actually make a little bit of money in the marketplace. This is brought back to life again in 1933 till 34. The new dealers begin to encourage voluntary limits on production, and this was meant to address the problem of oversupply. As you might guys might imagine, these encountered resistance. For all sorts of reasons. So these voluntary limits encountered resistance, and ultimately government mandated production quotas were found to be unconstitutional. So this is not going to solve the problem right, addressing supply is not going to solve the problem of abundance. The government cannot do that, in our country at least. I should say that farm subsidies were paid to farmers in order to encourage them to take lined out of production. So farmers who actually own their land, were paid subsidies to take their land out of production in order to limit supply. In some instances they were also allowed to destroy commodities, they were given subsidies if they destroyed the silos of grain in order to take those commodities out of the market right. If you if you take commodities out of the market the price might rise, these farm subsidies are actually is in effect in various sorts of ways right. This is how we support agriculture in this country, but these these measures taken to take land out of production in the early 19 thirties, received a great deal of criticism as you might imagine. Because Many Americans were starving, and they did not have enough to eat, so it seemed unseemly to destroy crops. Efforts to limit supply didnt extend any further, the solution to this crisis of abundance was not going to be limiting production. Its just not going to work. So lets look at what the new deal did in order to expand purchasing power. There were a lot of short term measures taken that would bolster income through work release program, so these are part of that relief, part of that legislation. These are shorter measures taken to bolster income through work relief programs. So work relief, work relief, thats easy for us. The government says we need to build some new highways, were going to hire a lot of people to build them, and thats work relief right . Highway gets built, you get some money, everybody wants. The government of course had to engage deficit spending in order to do this, and it relies on economic theory called kim zionism in order to justify this expenditure. So these work relief programs included all sorts of programs civilian conservation corps, which sent young men out to national parks. Serve two purposes, gave them income but also got them out of cities, and out of places where they might organize and radicalize. Young men between the ages of 18 and 25 are the most likely to radicalize, and most likely to cause problems. So it was a brilliant move to send them all the way, put them to work, hard work, hard physical labor out in the outdoors. And provide them with a wage that they sent back home. So you have the civilian conservation corps, you have something called a Tennessee Valley with already, which is meant to electrify, build dams and improve the infrastructure of the Tennessee Valley. You have all of these public rip programs that culminated with the wpa, the Works Progress administration, and the purpose of these programs, and this is quoting from of the new deal years himself. The purpose was, to get the National Income up, so that the underprivileged, one third of americans could be consumers. Literally thats the word he used, so they could be consumers. So we have work for these programs, these are shorter measures right, they dont last forever. The new deal also introduced longer term measures that were meant to lift incomes, meant to lift wages. These im gonna focus on three for you, the first is what was known as the wagner act, the wagner acts the official name is the National Labor relations act. The National Labor relations act, and it is on your list of ideas terms. So the National Labor relations act, its passed in 1935, and the purpose is really very simple. It made unions legal, it made forming a union legal, and engaging in collective bargaining legal. And this therefore allows, it gave working people and mechanism through which they could seek higher wages. So, wagner act makes unionization legal and provides a mechanism for working people to seek higher wages. It was a very effective for quite some time. The second measure that was taken in order to increase income and wages, was the passage of the fair laboreds standing standards act. The fair labor standards act is passed in 1938, its very simple outcome of that act. It establishes the minimum wage, and it establishes the maximum hours of work per week. After which, an employee would receive overtime. So its minimum wage, and maximum hours legislation. Fair labor standards act, finally i want to draw your attention to the Social Security act. Passed in 1935, which provided income security for Many Americans. The Social Security act provided insurance for people who might be prevented from working, either because they become disabled, or they get old. That is the Social Security act, it provides insurance for people, income security for people who cannot work. Either due to disability or to old age. Now, the new deal also introduced legislation that was meant to expand access to credit, im only going to focus on this for just a moment in the interest of time. As i had mentioned to you, Consumer Credit with the exception of balloon more congress appeared to be a safe business. American showed themselves willing to be able to pay off their debts, there was an adapters crisis. The federal government went in the business of underwriting and offering Consumer Loans. Most importantly through the house federal housing administration, the fha. The fha issue loans for the construction of new houses, and for the renovation of old ones. In between 1934, when the fha is established, and 1960, its financed more than 10 million homes in america. Its still an operation to this day. The they see the Homeowners Loan Corporation provided funds to people who cannot pay off their existing worry cages. They provided loans in a time where mortgages were practically unavailable. A few new deal agencies only a handful, not very many, made direct Consumer Loans. Mostly to farmers and the People Living in rural areas, these are not very important but their important in our class. So the farm credit administration, made Consumer Loans to farmers, my favorite one is the electric home and Farming Authority. The electric home and Farming Authority in 1934. It may loans to people to buy electric appliances, the Tennessee Valley authority had electrified this huge rural area, but all of the farmers living there didnt have the money to buy electric appliances or electric lights for their homes, or electric refrigerators. If you dont have appliances or lights to use electricity, what is the good of having electricity, and how are the electric companies gonna make any money. So the electric home and Farming Authority issued loans of people could buy appliances, and electrify their houses. The resettlement administration, which was an organization, an agency meant to help displace farmers and find new homes, also made Consumer Loans. And here you see some of the pictures of folks paying off those loans, these pictures were really important to try and gain legitimacy for these types of programs, by showing the people would pay the loans. Okay, the efforts of the new deal the efforts that the new deal implemented to bolster purchasing power, hide long term effects and significance. Pocket but politics played a very Important Role ever since the american elections and governments as well. I want to end class today by just drawing your attention to some of the efforts made in the 19 to protect consumers. So efforts are now being made to provide them with what we might call a living wage, or adequate income so they could become full fledged consumers. But the government also the new deal, began to try and acknowledge the necessity of regulation of the consumer market. And so will close with that, and will pick up again next week with the rest of the thirties. So in 1934, the fdic was established, you guys are probably familiar with the fdic. Its the federal deposit insurance corporation, and its job is to ensure all of our deposits, and all of the banks around the country. Deposits today are insured up to what 100,000 dollars . They increased it to more than that . I think its 2 50. You think its 2 50 now. Well you see were started right, where it started with 5000 dollars. The government decided in order to increase our confidence and banks, which had all failed. And when the bank failed all your money went away with it in 1929. That would it ensure our deposits, guaranteed to us that even if the bank failed we would still have access to our deposits up to a certain amount. So the fbi seized established in 1934 to protect bank depositors, to protect consumers. And the food drug and cosmetic act is passed in 1938, and thats designed to protect consumers as well, it was designed to protect consumers against faulty claims about the efficacy of drugs. It was designed to protect consumers from poisonous substances and drugs, mainly farmer pharmaceuticals were laced with arsenic. All sorts of poisons that could actually kill people, and cosmetics were full of poisons as well, so the pure food the food drug and cosmetic act of 1938 was designed directly to protect consumers. There are other efforts in the 1930s made to politicize consumer protection, most of them failed, so a number of activists called for the establishment of a consumers bureau. So it had, they had the department of commerce the department of labor why not have a department of consumers. This is what they argued, but it didnt go anywhere those efforts didnt go anywhere. In fact is not till 2011, that we see the establishment of a Consumer Financial protection bureau. Which is quite controversial, to this day. It was established in the aftermath of 2007 mortgage crisis so what i have taken you through is how the Great Depression itself was a crisis that is kind of predicated on the fact that the tremendous wealth and our country was distributed in such an equitable manner that the majority of americans couldnt participate in the marketplace. They couldnt be the kinds of consumers that advertising was encouraging them to become and that business needed them to be. And it necessitate a day politicization of consumption in order to bring in comes up to a point that we could have something that we today call the American Standard of living. This American Standard of living could not exist and be reasonably inspired to. With, that i will close the class. Thank. You i hope you have a good weekend. You are watching American History tv. Every weekend on cspan three, explore our nations past. Cspan 3, created by americas Cable Television companies as a public service, and brought to you today by your television provider. American history tv on cspan three, exploring the people and events that tell the american story every weekend. Coming up this Labor Day Weekend, saturday at 6 pm eastern on the civil war, historians kevin and Hillary Greene discuss how we remember the civil war, and whether to remove or contextualize confederate monuments. Then sunday at 6 pm eastern on american artifacts, we will preview photographs of native americans from the Smithsonian National museum of the American Indians collection, which includes more than a half million images. At 8 pm, on the presidency. A look at president ial retreats including abraham lincolns summer college, herbert hoovers shin indo efficient, camp and stories of the kennedys, clintons, and obamas in marthas veneer. Monday night, an American History tv and washington journal look back at the events that led to the bombing and their legacy with author ian toll and president trumans grandson, Clifton Truman daniel. Exploring the american story. Watch American History tv this Labor Day Weekend on cspan three. Just before world war ii, radio is gaining popularity like social media today. Professor mark burns teaches about the rise of radio as a National Media and its Public Opinion impact on whether to enter world war ii. The class uses sound clips showing the role radio play in shaping american views and Foreign Policy. So last week, we talked about the war in europe and in asia. What i would like to talk about today is the american reaction to all of that, what is called the great debate over american involvement in world war ii. This is arguably the most important debate on Foreign Policy and all of American History. And Public Opinion probably more than anything in this debate mattered, in part because for the first time, there is a way of gauging Public Opinion. The gallup poll organization had begun regularly l