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