Hindered American Consumers from keeping up with the high levels of american productivity. Her class is about 75 minutes. Its been the last few weeks considering how americans adapted to abundance, between the 1890s and the 1920s. Despite their efforts of producers, advertisers and retailers and of others, the supply of goods continue to outstrip demand. This was not because everyone all hundred 6 million americans had everything they needed. It was because they didnt have adequate purchasing power. They dont have adequate wages or income to buy all of that stuff. And it wasnt just americans who were in the situation. But so to our trading partners around the world. They dont have enough income to buy all of the commodities we were producing in our fields and all the wonderful things are factories were making. So by the end of the 1920s, the American Economy went bust. You will know this. You all know the stock market crashed in 1929. And the World Economy went bust as well. Worldwide economic depression said in, the last 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. Weve talked a lot about how consumer culture rolls to be at the very center of american culture. And i keep telling you, that we need to consider politics. In today is the day that we will think about how consumption became politicized. Here is a graphic that typifies the usual story that historians tell about the Great Depression. Im sure you have all heard this at one point or another. In your junior when you are juniors in high school in American History class, or had other American History classes. Here are the typical stories that are told. In each of the bubbles in this graphic does bear some of the burden for the catastrophe. But i want to focus our attention on the bottom to baubles. The unequal distribution of wealth and overproduction. I want to show you, how the relationship between those two brought on from what we could call a crisis of abundance. To the world historical levels of agricultural and manufacturing productivity, we have talked about this. An age of abundance that arrived in the United States by the 18 seventies. The shift from an economy of scarcity, which we talk a lot about, when economy of abundance entailed what we identified in this class when we started releasing susans trouser satisfaction guaranteed. It entailed a crisis of distribution. We so much was being grown, and so much was being made that not only were the logistics of getting goods to market difficult, but finding new markets became imperative. So i ask you, just as review, what were some of the things that producers farmers manufactured . What were some of the things they did to solve this problem of overproduction to find new markets . We yes . Sam . We are differentiation with name brand, and any type of description on the packaging. Okay right, product in french asian, name brand packaging. What else besides what sam is just listed for us . What else today do to find new markets . We retailer and will the direct consent to connection to consumer. They tried to pass over the wholesaler the retailer the right to the consumer. Anything else . Theres so many things we talked about. We talked a lot about the shift from Production Marketing to what kind of marketing . Market driven production. Market driven production. We see right here in the slide, a great example of Market Driven production. What item on the slide typifies marketing driven production. The chris co. The barrels of flower typified production given marketing. And you see the label bobs right thats the packaging, the branding in packaging and differentiating a product. These are a number of the things that producers, steps they took in order to try to find new markets for all the commodities that were growing, and all of the goods that were being made in factories. Despite these incredible efforts, we 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 enough sufficient purchasing power to buy everything that was for sale. So the First World War rolls around and it delayed reckoning with this problem of overproduction. In much of the 1920s, there was slight increases in purchasing power. Thats received a reckoning with the problem of abundance as well. You had world war i, steves off the reckoning with the problem of abundance, then the 1920s, slight increase in purchasing power puts the problem off a little bit longer. But because prosperity did not lift all boats sufficiently, at the end of the twenties the crisis of abundance erupted. This time generally more demand was impossible. It was impossible to differentiate products even further. We talked a lot about that. All their efforts that advertisers went to add some kind of value to their product. But at a certain point, there is no new markets to be found. Theres no new demand to be generated. Americans wanted everything, as far as i could tell, but it didnt have enough power to pay didnt have enough money to pay for it. Let me first remind you about economic boom of the 1920s. We have it in this class actually put some numbers to that right . We looked at the advertising of the 20, but we havent talked about the economic boom itself. Ill just give you a bit of information about it. At the start of the decade, at the very beginning of the 1920s, at the end of world war one and, at the very end of 1918 november 1918. At the beginning of the 1920s, the u. S. Help 40 of the wealth of the entire world. We were officially the richest nation in the world at that point. And over the course of the decade, a gross to messed a product the gdp, Gross National product increased 40 . Increased 40 between 1920 and 1929. And this was because agricultural and manufacturing productivity nearly doubled. Nearly doubled in less than ten years. The number of telephones doubled, from 10 million to 20 million. The number of automobiles tripled, the numbers of radios increased from 60, 000, to 10 million. Part of the 60,000 was in 1920 radios or parameters into shortwave radios, by 1929 Everyone Wants a radio right . There are widespread consumer good. Nevertheless its an incredible increase in productivity. From 60,000 to 10 million. There were 160 times more electric refrigerators in 1929. As of 1920. So the rate of productivity not only did productivity double over the course of the 1920s, so did well, so did prosperity. Lets look at prices. Lets look at prices for a minute. I think weve talked about this before. Let me remind you about the Consumer Price indexes. The Consumer Price index. It is probably something you here in the news or you see a newspapers. Often abbreviated to cpi. Cpi is a measure of what a Market Basket of basic goods might be. Eggs, milk, butter. The kinds of stuff that an ordinary family, almost all of us would buy. It is a measure of how much that would cost at any given moment. It is taken as a measure of the cost of living. You can see from the graph here, that during and shortly after world war one, the prices increase pretty dramatically. The increase by as much as 60 . Then in the post war period, immediately after the war, that big shot there, that was due to a post war recession. The drop. It plummeted well below 1914 levels. And through 1924, the prices suddenly increased. Then there is a little bit that rise more until 1926 and then they level off and they begin to go downward by the beginning of 1929. If we look at the increase of prices over the course of the 1920s as a whole 1919 and 1929. We see up and down. But as a whole, inflation was only 1 . It was a very low rate of inflation in the 1920s. Between 1900 and 1920, the rate of inflation was extraordinarily high. 1900 to 1914, prices increased by 17 , and 1914 to 1919, five years, prices increased by 60 . Although americans in the 1920s experienced a relatively flat rate of inflation which is good for purchasing power, over the course of those three decades from the beginning of 1900. The cost of living did increase. It doubled, more or less. Price of rent, food, its set era. It doubled. If we look in the corner at the price of the model tea, we see a slightly different story. We see a different trend. What is the price of the model tea do . It goes. Noun right, it goes down. It drops pretty precipitously. What happens in 1913 that brings the price of the model t down . The moving Assembly Line. 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 are dropping, so the model t, the price of there was luxury automobiles whose prices increase, but as a whole, automobile prices are dropping. And prices for other durable goods are dropping as well. Like refrigerators, radio sets, look how oil prices decreasing over the course of the 1920s. The price of semi durable goods like clothing, shoes, all those semi durable goods. Their prices are decreasing as well. These were precisely the goods exactly the things that were featured as elements of the good life. Weve read the great great gatsby. For tuesday, for class on tuesday. Clothes and shoes and automobiles and telephones were featured as part of the life of these very rich people. These items are not only featured as part of the lives of the very rich people, but part of the good life that ordinary people should seek to attain. They were featured in magazine stories, advertisements, songs, movies. They for the needs on send of the good life of what americans should aspire to, and we see these items, these expectations for folding owning these items being showed by advertising, movies, the lifestyles of celebrities. When we talk about prices, but 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. Prices, cost of living, expectations, standard of living. And the standard of living in the 1920s was on the rise. Its new standard of livings 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. Let me be really clear with you. Many americans, most americans had to make do without electric refrigerators, without automobiles, without colorful house dresses or matching bathroom towels or all of the things that we would think about. Increasingly the, these luxuries were coming to be considered decencys. The shift from luxury to decency. As decencys, they were coming to be considered the birthright of all american citizens. Something that all americans had a right to claim, which for, and to want. Let us think about this. Despite historic levels of economic productivity we have historical levels of economic productivity. We have decrease in prices, higher standard of living. Many americans were forced to live on the edge. They were making due. They were like george wilson, from the greats gusty. They were living in the ash heaps. There is a lot of disagreement. No scholar has figured out exactly how Many Americans were living in poverty during the 19 twenties. There was not an official bureau charged with collecting statistics about poverty. There was no official agreement today as to what constitutes living in poverty or living out of it. I looked and i have seen some scholars estimate that 70 of all americans lived 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. Those estimates are extreme. Extremely high, extremely low. I think the best guest is about a third. 30 , 33 . About a third of americans were living in poverty. They were living lives of real probation, economic difficulty and in addition to those numbers, those people, another 20 of them 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 guys notice from this wage chart . What do you notice . How do the farm workers wages look . They look similar to the unskilled workers, but they are based on seasonal work, and the total is significantly lower than the unskilled workers. That is right. The yearly total is 357 dollars down to 294. That is poverty. Those are poverty wages. It is estimated in the 1920s, im not sure whether i agree with this, but it is estimated that it took about 2500 dollars a year for a household to live a discern decent standard of living. We can see even with the skilled workers that this is not an easy time for them, although 1500 seems a lot better than 300 a year. Right . Anything else you guys noticed from that wage chart . Look what are they going up . For some . Then they kind of flatten out. If we were to take these wages and compare them to productivity, productivity doubles. In the space of ten years. But the wages, do they double . No. Not even close. Not even close. Wages are not keeping up with productivity at all. With the suggests is that working americans were not receiving a significant or a fair share of the wealth. The distribution of the wealth that is being generated by this massive amount of productivity is perhaps an evenly spread out. Lets thing for minute about the distribution of wealth. It is probably something you guys have heard about. It is in the news a lot today. The distribution of wealth. In the 1920s, the top 1 , we have all heard the term the 1 . It has become a very popular term in our day. The top 1 held about 24 of the nations wealth. To top 1 holds 24 of the nations wealth. Let us take the next 9 . You have the 1 and the next 9 . The next 9 held 26 of the nations wealth. Top 1 has about a quarter of the nations wealth. Top 9 have a quarter of the nations wealth. As a whole, the top 10 hold 51 of the nations well. They hold the majority of the nations wealth. Let us look at the bottom 60 . The bottom 60 of americans have 5 of the nations wealth. 5 . Then that other 30 in between that bottom 60 , they have the rest. They were doing pretty well. They have about 45 of the nations wealth. 44 . This is an incredibly unequal distribution of wealth. In fact, at no other time in our nations history, except for right now, has there been any quality. Has the wealth been distributed so unequally. We are not a contemporary history class, we do not think to we do not need to think about the present moment. We will consider the 1920s here. The distribution of wealth was incredibly unequal. As a prominent intellectual and activist, named wta beat the boys, im sure youve some of you have heard of it. The boys observed and hes looking at the situation. He did not have access to the kind of statistics ive just laid out for you, but he is looking at the situation and it is clear to him that something is very wrong and he observes and he quotes we have today in the United States, cheap prosperity and depression. Cheek by jowl. Just like this African American new sport. He is selling a newspaper. The headline is proclaiming attacks on billionaires. Or dissent over this billionaires tax. This is a 1921. Cheek by jowl, prosperity and depression. Not only were African Americans like this young boy and most other African Americans and other migrant norah needs that were impoverished, so two were farmers as you can tell from the wages we just looked at. Farmers were impoverished. They made up about 30 of our population. So were the coal miners. Unskilled laborers. We have a vast proportion of americans who are essentially impoverished. Despite the slow rate of inflation of the 1920s, we have looked at this distribution of wealth, despite the slow rate of inflation, the prices arent changing. Most americans did not earn enough to buy the necessities. They did not earn enough, let alone the decencys or any luxuries at all. This is the situation that characterizes the 1920s. Heres the situation. You have incredibly high levels of economic productivity. You have rising considerate consumer expectations. You have wages that do not match the pace at all. Up up up goes productivity, but wages are here. They are flat and in some cases going down. What do americans do about this . What did they do about this . Let me make some generalizations free first about how individuals and communities handle it when they cannot pay for their needs and their wants. Just for a moment, you might think about this yourself. What do you do when you cannot pay for what you need . What do you do when you cannot pay for what you want . What are some of the things some of the strategies, your college students. I bet you want many more things than what you can pay for. Maybe you need things you cant pay for. What might you do . Henry. Substitute with other products or items, may resort to stealing. You might steal, substitute. I like these ideas. Take out alone. You can take out alone. Get credit. Get a credit card. What else might you do . Move in with friends. Saving in that sense. You can cut costs, share a textbook. Move in with friends. Share a car. Take the bus. You can economizing all sorts of ways. Weve got taking out loans, stealing, economizing. What else . Loan you could get another job. You guys are also smart. You can tutor. There are zillion kids in this town who need to drink. You can tutor, you can babysit, take a minimum wage job. If you are over 20 when you can barton, wait tables. There are all sorts of things you can do to add to your income. Now henry logan suggested ways of economizing or trying to substitute trying to stifle your demands right . You could eat less right . When i was in my first Year Graduate school i didnt have very much money so i ate a lot of rahm in noodles. You know limit your expenditures and desires and wants and needs. You can figure out how to do that. What we just sort of laid out here, these are common spends strategies. There is nothing you about what you might come up with with how to make your ends meet, and this is what americans have been doing for a long time. Let me summarize for you. There is one thing you did not mention. That american started to do and thats trying to control prices. So the first thing you might do if youre needs and wants or income does not meet what you need or want, you could protest prices. You could engage in collective action to try to prevent inflation. Try to prevent rising prices. Thats the first thing. The second thing you could do what you guys sort of indicated if you could try to stifle demand. You could try to make to, spend less you could try to expose yourself less to all of those stimulant that make you want things. You could stop internet shopping for instance. And the third thing you could do, and this is taking out alone are getting a job as someone suggested, you could try to increase your purchasing power. Try to add to your income. So what did americans do in this period in 1900 and 1930 . Well i think you would be pretty obvious that in the 1920s americans were not trying to control prices. Prices if anything were going down. Theres no reason to try to control prices when they are not going up. So theyre not trying to control prices in the 1920s. In fact the most part they were actually really relieved that the wartime inflation of 60 was over. And they were relieved the prices that returned to prewar levels. So we dont see any protest. But this stands in contrast with the period from 1900 and world war one. 1900 to 1915 or so, america protested price hikes and all sort 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 at risen so hard and so high so that we are not gonna buy any longer. If i choose not to buy me nobody zenith change the price of meat right . But if all of us in dallas said we are not buying meat, until you decrease the price by 25 , we might get through to them right . This is precisely what housewives did in 19 oh 8 09. They boycotted butchers to protest the high price of me. This is one that will inspire you. They refused to pay their rent. And these were called rent strikes. Iran strike only works if everybody in the building refuses to pay the rent right . Easy for a landlord to kick me out and find another tenant if i dont pay my rent. But if all of us didnt pay our rent the landlord is gonna have a hard time finding 28 people to fill all those apartments. So iran strike might be effective again with collective action. These are the sorts of things that americans the dew and prices were rising out of control. At the same time the government during world war one, during the war the government recognizing inflation was out of control, and there was gonna be writing and worse if they didnt bring it under control put price controls on food and fuel. So there was government regulation of prices. So we were talking about how to balance income, with needs. We talked about controlling prices. No need to do so in the twenties. What about controlling demand . What about controlling demand . Stifling expectations, spending less hardly requires collective action right . Hardly requires strikes and boycotts and riots. This is more of an individual response to the problem. So most americans i would argue except for maybe jake gatsby and Daisy Buchanan stifle their consumer expectations. They stifle their desires to one degree or another. They dont just buy everything they wanted. Did not buy a new refrigerator every year or a new automobile every year. Let alone all those other bubbles in gadgets that will be coming available. Americans didnt engage completely in self denial either. Instead what they did in this is what you guys indicated when we started talking about this, they stretch their dollars. They are creative and ingenious in ways to stretch their dollars. They made their own food. They made their own close. We see now hear a pattern from the mid 19 twenties, many women made their own dresses, close for their children. They saw their own close. Trying to be a lot mud, in the fashion of the day but nevertheless making the clothes rather than going to the Department Stores and buying ready made clothing. It made their own food. They can their own tomatoes, can their own vegetables and made applesauce. They put them away for the winter and engaged and they dont have to buy the hinds canned tomatoes or the canned goods that were available. American saved an budgeted. There was a tremendous interest actually and household budgeting during the 1920s. And they traded in bartered. They traded eggs for a homemade dress, they bartered and traded services amongst each other. Sometimes they resorted to stealing and they bargained shop. They went to Secondhand Stores and they bought things on the black market. These are some of the few ingenious ways americans tried to stretch their dollars. But it didnt work entirely because its only so far you could stretch something so americans began to look for ways to increase the purchasing power. They moved away from trying to control price and trying to control demand, and try to take care of the other side of the equation which was purchasing power. How could we increase our income . They tried to get paid more. They change jobs. The quit working in a gm factory and went to fort factory. Why forward . Because he paid five dollars a day which was twice the wages of other automobile factories. Then the 1920s 14 increases daily wage to six dollars away a day. After the stock market crashed and the economy went into decline, for raised its wages to seven dollars a day. Course he laid out laid off a lot of workers, those looking out for getting seven dollars a day. This was because ford understood without purchasing power, there would be no market for all of those automobiles. All of that stuff. There are other ways you could raise your wage besides working for four, or finding a higher paying job. You can raise your wages by unionizing. Unionizing is another way of engaging in collection act action. I go to president turner and i complain about my salary it will make any effect. Hell entertain me, it wont change my salary. If i say im not cannot teach classes anymore until you give me a salary increase, it wont do anything. What if all the faculty engage in collective action, we would likely see an increase in our salary. Just as if all of you engage in collective action, you would probably see a decrease intuition. This is erin on National Television so here we go. I have no called for collection collective action. The point is unions give laborers more Bargaining Power than when a labor stands by himself or herself. Americans formed unions, and they went on strike. They went on str world war one. Prices were so high, but their wages actually do not match the price increases. So they went on strike between 1919 and 1922. There was an awful lot of strikes. Because wages did not match the pace of the increase the cost of living. For the rest the 1920s however we see very few strikes. Very little in terms of collective action. Okay you try to get a higher paying job, theyll be one way to increase your income right . Another thing you can do, you can get a high paying job is you could send more members of your household outwork right . You could send more members of your household out to work. You can send your children, your wife to work. You yourself could take extra jobs right . Instead of working one job you might work two jobs or three jobs. You can do side jobs. You can engage in criminal activity . You could bootleg, you could smuggle and engage in the black market. These could all increase your Household Income. You try to increase your individual income and Household Income and then theres a third thing you could do. This is what emily suggested this is definitely the american way by the 21st century and thats you could take alone. You could 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 and theres a concept of pocket politics. I think its an ideal term. Okay good if we look backwards at various moments during the 19th century, americans so during the 1800s various moments americans protested high wages, not even a protest i wages are misspoke, the miss they protested high prices and low wages. Riots, many strikes, maverick walkout strikes were directed at these problems of high prices, and lope wages. But usually the activism in the 19th century, usually the activism in the 1800s was directed at employers, or at merchants, it was directed very directly to whomever was paying the wages are setting the prices. It was not directed at the government, the activists did not march in washington d. C. And ask congress in the president to raise wages or lower prices. It did not occur to them that there was Political Solutions to these economic problems. They sought Marketplace Solutions for their economic problems. This is the 19th century. Around 1900 or so, americans began to demand Political Solutions to economic problems. Began to demand Political Solutions to economic problems. 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. The began task the government to control inflation and to regulate wages, to ensure access to basic living standards. You guys could immediately think of the measures our government does to the state to control inflation, make sure there is basic standards of living thats what food stamps and welfare is for. Those were unheard of actions for the government to engage in. But the government began to ask for that kind of government involvement. As a historian meg jacobs has shown in her book pocketbook politics, the United States these kind of politics entered into the american political arena, in the early decades of the 20th century. What happened to pocketbook politics in the 1920s . What happened to them . In the 1920s pocketbook politics were dormant. They were not to be seen. And this is in spite of the fact that as Calvin Coolidge famously said, the business of americas business. Thats exactly what he meant it didnt say the business of americas taking care of consumers. He meant the business of america is business. The 1920s the department of commerce flourishes and helping american businesses find markets at home and abroad and helping them become more efficient, and helping them adapt scientific management, become more productive. The business of america was business. So it didnt concern, government didnt concern themselves with purchasing power. Americans as i said did not engage in collective action. There were hardly any strikes there were many protests and there wasnt any communal efforts to make up for this difference between wages and once. Through the 1920s. We meddled along. The dorman sea of pocketbook politics in the 20s was due in part to the slow rate of inflation, so you have a slow rate of inflation and people cannot complain about rising prices. It was also due in part because, Consumer Debt became more widely available. Consumer loans, rather, became more widely available. As you can see here, over the course of the 20s, Consumer Debt nearly tripled. We have 3. 3 billion and that in 1920. This Consumer Debt includes home loans, mortgages. By 1929, 7. 6 billion in debt. Okay. Where did americans get their loans in the 1920s . On your hand out, ive included the list for you. Let us just talk it through for a moment. Who lent the money . Credit, like always was always available for family and friends, until youve tapped those markets out. Family and friends. Secondly, pawnbrokers. Americans frequented pawn brokers and received small amounts of credits. There were also small loan lenders. A small loan lenders sort of the payday lender that are so prevalent today. It makes small loans, garnish your wages with very high interest rates. Manufacturers also offered Consumer Credit. They did so with installment plans. If you wanted by an automobile or a piano, or a kind of durable good, electric appliance, a sewing machine, a bicycle, you could buy with installment credit. Fifth louis, retailers offered credit. They began to offer charge accounts for the wealthy. You see here on the side of budget account from when a maker. It was the 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 a budget account to make it seem like something thrifty and worthwhile and something good. A budget is good. Credit, that. They called it a budget account rather than credit or charge account. Department stores began to issue little tiny charge plates that looked like dog tags to wealthy customers so they could use it without having to go through the labourious process of the finance department. Retailers are what offering charge accounts for the wealthy and offering installment plans for and everyone else. The sort of took the shape of lay away. Lay away. You identify a pair of hiking boots that you really want but you dont have enough money for them. You are worried that they will sell out, so you put ten dollars down and they hold on to the hiking boots. Until you paid them off. Each week, you come into the store. You pay a little bit more on these hiking boots, and once youve paid it off, you get to take them home. That is different than the way we buy hiking boots today, right . How do we buy hiking boots today . If i dont have any money in my bank, what do i do when i find those boots that i want . Put it on your credit card. I just put it on my credit card and i get to take it home, right . It is a different kind of relationship. It is credit, but it is a different kind. Lay away says was prevalent through the 1970s. Do people still do it today . Is there still a way . For what kind of large purchases at generally like in big stores, like target or walmart will offer that. Do they hold on to the goods until you paid off . I dont think so. I think they give it to you with the assumption that you can buy it. Again, it is a different kind of relationship between the retailer and the shopper. We have the last source of Consumer Credit. Thanks. Banks offered Consumer Loans for the wealthy. Again, very wealthy people could go to a bank and get a long to make consumer purchases. The rest of us, no. The bank will not give you a Consumer Loan in the 1920s. They also offered mortgages. There is a lot of different sources of credit in the 1920s, but nevertheless Consumer Credit was not available to most americans. Most of this credit, except for the pawnbrokers and the small loan lenders, that wouldve been credit issued just to get people buy for the next week, but most of the rest of the credit would have only been available to the top quarter of the american population. Tug an economy as productive as the American Economy just could not go on this way, 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. I have brought you to the point where we can think about the Great Depression. We can think about what happened. Im fairly certain you guys can figure out the answer at this point, or the answer that i am proposing. He answered that makes sense for our class of the history of consumer culture. The Great Depression was the crisis of abundance. We, the United States had figured out how to grow and make a tremendous amount, and array of things. We could make so much stuff in so many different things. We figured out how to market these goods. We figured out literally, how to get them to market, forms of retails, figured out new kinds of advertising. We figured out how to market these goods, but the one thing we had not figured out yet was the third lug was how to provide americans with the means with which to borrow the stuff. Figure out how to make it, get it to market, but we had not figured out how to give people the means to buy all the stuff. This accord was a political question. This is a political question. It is a question that socialists, communists, and marxists had been asking since the 18 seventies. They have been asking this question since the 18 seventies, and they continue to ask it until the end of the 20th century. Revolutions were premise on this question of how to get people adequate purchasing power. The mexican revolution in 1910. The Russian Revolution in 1917. This political question was being asked. But the kind of answer that socialists, communists and marxists were giving was not an answer that americans would want to give. We are not just going to dismantle the capitalist system. Its been working pretty well. We liked at the way it was. American Political Parties had to figure out how to adjust this question and maintain private enterprise. Let us look again at the glut of commodities and manufactured goods. Let us look first at forming. Farming had been in a depression since the end of world war one. They had been in a depression that was just as terrible as what we saw in the thirties since the end of world war one. Because during the war, the First World War, farmers expanded acreage. Expanded production, because it was so much demand for american agricultural commodities. As you can imagine, with all of europe engaged in war, there was not a lot of room for them to grow the crops. There was tremendous demand for our commodities. Prices went up. About 60 increase and prices. Terrible for the american people, but pretty awesome for farmers. They are selling stuff for tremendously more than they had at the beginning of the war. What happened was the wars over. The farmers could not cut back on production. They continue to expand it. They continue to put more acres and cultivation. They continue to improve methods of cultivation. It continued to mechanized all these things to increase productivity. As a consequence, there is a glut of agricultural products, agricultural commodities. Wheat, butter, milk, pork, and so for half as much in 1929, half as much, as they had in 1914. It is not a good situation to be in if you are a farmer. Terrible situation. There was no amount of branding. No amount of packaging, no amount of marketing that could have raised the price for agricultural products. There were just too many. Manufacturing was a little better off. There was not a glut of manufactured 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. 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. Thats, a disaster was in the making. By early 1929, it was clear that the u. S. Was experiencing a crisis of abundance. Where houses were full of automobiles. Full of radio receivers, full of refrigerators, watches, clocks, bathroom fixtures, towel sets, you name it. Where houses were full. Theylls of cotton like the ones you see here filled with sheds waiting to be spun into thread and made into cloth. Backrooms of stores were stacked to ceilings with unsold inventory. Cattle and livestock credit crowded pens. You wont take your cattle to the slaughterhouse unless there is a market for it, right . The pens were crowded with cattle and livestock. They needed to eat, so you have to continue buying feet for them. Grain silos were at capacity. The problem of distribution reared its head again. This could describe 18 seventies. Different products but the same kind of problem of oversupply. As i said, americans were all too willing to buy, but they did not have the purchasing power. Neither did our trading partners in latin america and europe. They had even less purchasing power than americans. This is early 29. Now, some observers had noticed the science of this trouble. Signs of these problems before 1929. It was only in late october that it became clear how deep the trouble was. How bad the situation was. The market begins to slide. It begins to slide in early october. What an interesting story. It is not really important for this class, but this could be a little tiny snippet of it. It begins in early october to slide. You see daily losses in the stock market. In mid october, the london stock market crashed. It collapsed. American traders began to sell off their holdings frantically. They were in various actions taken try to prop the market up, but on monday october 28, the market lost 13 of its value, and then the next day it took another beating and lost another 12 . 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 story days in American History. Ironically, for all purposes today, 30 years ago today, october 19th 1987, 30 years ago today, the market lost 23 in a single day. You guys are not even born yet, probably when this happened. 23 in a single day. In 1929 as in 1987, the market was overvalued. There was a lot of speculation and there was a lot of what was combine on the margin. This means buying stock with only 10 , putting only 10 down. Hoping that you would be able to sell the stock off at the higher price than you bought it for, pay that loan off and walk away with some profit. That is buying on the margin. But heres the thing. Market is overvalued, people are buying on the margin. It seems like a terrible thing. It was a terrible thing. But only 10 of americans were actually in the stock market, so the crash of the stock market only would have had reverberating effects on them. They werent directly affected by it. Its crash moreover, was a symptom of economic collapse, of economic weakness. It wasnt the cause of it. We often, when we talk about the Great Depression, because the stock market was so dramatic. It is such a great story. We tend to tell the story as if the stock market collapsed, and it caused the Great Depression. But it did not. It was a symptom of the underlying problems. It exacerbated the problems. Lets see how we are doing on time. The Financial Sector was unregulated and because it was unregulated, when the market collapsed loans were called in. All these loans are called in but nobody has any way to pay their loans off. They are runs on banks and the banks collapsed altogether. Banking was not regulated at all. A bank did not have to secure its deposits in any way. As a consequence, 9000 banks collapsed altogether. Im showing you here a paper from a mortgage, its called the balloon mortgage issued in 1928. In addition to the financial panic caused by the crash of the stark market, and the failure of the banks, there was a tremendous lack of diversity in the economy. It was over invested in automobiles as you see here, it says over invested in automobiles, its over invested in construction. And it had very weak sectors. Theyre at very weak sectors of our economy, farming obviously was tremendously week. Textiles were very weak, and mining. Very weak sectors of the economy. So this lack of over investment and Certain Industries and very weak sectors meant the economy was quite vulnerable when the crash came. Now we are back to those big inventories that have piled up. No one was spending. American consumers were saturated or poor. There was no superathlete typing of competitive copy or increase in possess on fashion that was gonna solve the problem this time. The Unemployment Rate began to rise after 1929. After the stock market crashed. But interesting lee Consumer Debt did not soar. In fact people began to pay off their loans. What was discovered in bad times, people borrowed less, not more. This actually spurred the development of Consumer Credit. It proved the legitimization of Consumer Credit and allowed in the 1930s and after world war ii, the vast expansion of Consumer Credit. When i was realized that people would try as hard as they could to pay off their loans. In fact installment loans that americans had the data taken out and we are still open in 1929 and 1930, americans worked very hard to pay those loans off. There was very few defaults on installment loans. There was only one sector of the economy in which there was a lot of defaults, in terms of Consumer Credit. Which sector . Arming . They definitely did default what kind of loans that others in farmers default on . Largely because the balance was so big they defaulted on mortgages, they defaulted on their mortgages. Mostly because they couldnt pay them off. They could not come up with a 25,000 dollars to pay that loan off. Unlike our loans today, our mortgages today would be for 15 years or 30 years, and that the end youve paid your whole house off. These loans were for a much shorter time period, and tended to be a large balance do at the end of the long period. You just refinance it. No one could refinance the loans. But in the other sectors, it defied expectations. People pay their loans off. So the economy grinds down to a halt. We have high rates of unemployment, and things only went from bad to worse. The Gross National product increase by 30 , unemployment goes up to 25 , wages fall if you are lucky enough to keep your job wages fell. Banks fail hundred thousand businesses fail. Construction starts to drop 78 of corporate profits from ten billion to one billion. Its a bad time. Its a really bad time. Interesting lee, with all of this, prices did not drop. They did not draw very fast. Prices held steady, so very interesting. And its part of the reason why we are gonna see the pocketbook politics come back to life in the 1930s. After the economy collapsed hoover ville like this one came up across the country. People hit the road, they migrated out of the south, they stopped getting married. They stop having children. They stopped going to college. They economized and bargain hunted and secondhand shop. They stop spending. And they became politicized. They sought Political Solutions to their economic problems. Pocketbook politics came of age. The last bit of class i want to take you through what these pocketbook politics looked like. What did they look like . What was the shape they took . Its no surprise that all, i think anyone couldve been elected in 1932 over herbert hoover. Its also prize that roosevelt was elected in a landslide in 1932. With fdr at the helm, the United States government sought to address the crisis of abundance. Its sought to save capitalism. That was their goal. To save capitalism and save democracy. They sought to do it with something called the new deal. They sought to do it was something called a new deal. The new deal was a huge huge array of legislation. The belief is that government legislation could solve problems. The new deal was an alphabet soup of legislation, that we could divide into three categories. The three rs. You will remember this. Relief, so there is legislation that was meant to provide relief to people, immediate relief. There is legislation that was meant to hasten recovery, recovery of the economy. Relief recovery and reform. There was legislation that was meant to reform the economy, so that these problems would not happen again. The very earliest years, fdrs elected in 1932, hes not inaugurated till march of 1933. In the very earliest years of his administration, new deal new dealers or what were gonna call the people that worked for roosevelt. They started putting limits on production. Think about this. One of the causes of the Great Depression of this economic collapse was this incredible high rate of productivity. Remember how we talk about in the gilded age to limit competition so less control and supply, monopolies are formed trusts are formed and pulls our form, in a way to producers can 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 and 34. The new dealers began to encourage voluntary limits on production. This is meant to address the problem of oversupply. As you guys might have imagine, these encountered resistance. For all sorts of reasons. And ultimately government mandated production quotas work found to be unconstitutional. Thats not gonna solve the problem. Addressing supply is not gonna solve the problem of abundance. Government cannot do that in our country at least. I should say at least farm subsidies were paid to farmers in order to encourage them to take land out of production. Farmers who actually owned their land were paid subsidies to take their land out of production in order to limit supply and in some instances they were also allowed to destroy commodities. They were given subsidies if they destroyed those silos of grain, in order to take commodities out of the market. If you take commodities out of the market the price might rise. These farm subsidies are still in effect in various different ways this is how we support agriculture in this country. But these measures taken to take land out of protection in early 19 thirties received a great deal of criticism as you might imagine. Because Many Americans were starving and did not have enough to eat. It seemed unseemly to destroy crops efforts to limit supply did not extend any further. The solution to this crisis of abundance is not gonna be with limiting production. Thats just not gonna work. Lets look at what the new deal did, in order to expand purchasing power. There are a lot of short term measures taken me that would bolster income through work relief programs. These are part of those relief legislation. Is a short term measures, taken to bolster incomes through work relief programs. Work relief, thats easy for us. The government says we need to build some new highways, right to hire a lot of people to build them and thats work relief right . I would gets built you get some money, everyone wins. Government of course had to engage in deficit spending in order to do this. And it relied on economic theory called canyon is him. In order to justify the six spanish. Or include all kinds of programs the civilian it serves two purposes. And gave him income, but also got them out of cities and out of places where they might organize and radicalized. Young man between the ages of 18 and 25 are the most likely to radicalize and most likely to cause problems. It was a brilliant move to send them all the way, put them to work, hard physical labor in the outdoors. And provide them with a wage. That they sent back home. You have the civilian conservation corps. You have the Tennessee Valley authority which is meant to electrify and build dams and improve the infrastructure of the Tennessee Valley. We have all these public works programs, which culminated with the wta the Works Progress administration. And the purpose of these programs were and this is quoting one of the new dealers himself. The purpose was to get the National Income up. So the underprivileged one third of americans could be consumers. Little that was the word he used so they could be consumers. We have worked really programs. These are short term measures. They dont last forever. The new deal also introduced longer term measures that were meant to lift income. That were meant to lift wages and these im going to focus on three for you the first was the wagner act the official name is the National Labor relations act. It is on your list of why the terms. Its passed in 1935, and the purpose was really simple. It made unions illegal. It made forming a union legal and engaging in collective bargaining legal. And therefore allowed and gave working people a mechanism through which they could seek higher wages. So wagner act, makes unionization legal, provides a mechanism for working people to see and seek higher wages. It was quite effective for quite some time. The second measure that was taken in order to increase incomes in wages was the passage of the fair labors standard act. Its passed in 1938, very simple outcome of that act it establishes the minimum wage. And it establishes maximum hours of work per week. After which, an employee would receive overtime. Its minimum wage in maximum our 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 have become disabled, or they get old. Its the Social Security act. It provides insurance for people, income security for people who cannot work. Either through disability, or because of old age. technical problem as i mentioned it appeared to be a safe business. Americans showed himself to be willing to pay off it thats. The federal government got into the business of underwriting and offering Consumer Loans. And most importantly, throw the federal housing administration, they issued loans for the construction of new houses, and for the renovation of old ones. In between 1934 when the fha is established in 1960, it financed more than 10 million homes in america. And its still an operation to this day. The hln all Long Corporation provided loans to people who could not pay off their existing mortgages. Provided loans in a time when mortgages were practically unavailable. Cough a few new deal agencies, only a handful, not many made direct Consumer Loans. Mostly to farmers and People Living in rural areas. These were not very important but important in our class. The Farm Credit Administration made Consumer Loans for farmers egg. My favorite one is the electric home and Farming Authority. The electric homes and Farming Authority and 1934. It main loans to people buying electric appliances. It had electrified this huge rural area. But all of the farmers living there did not have the money to buy electrical appliances or electrical lights for their homes or electrical refrigerators. If you do not have appliances or lights, what is good of having electricity, and how are the electric Companies Going to make any money . The electric calm and Farming Authority issued loans so people could buy appliances and electrify their houses. The Resettlement Administration which was an organization of an agency meant to help displaced farmers finding homes also made Consumer Loans. Here, you see pictures of folks paying off those loans. These pictures are very important to try showing the people would pay the loans. The efforts of the new deal, what it implemented to bolster purchasing power had long term effects and significance. Pocketbook politics played a very Important Role ever since and american elections and in governance as well. I want to end class today by drawing your attention to some of the efforts made in the 1930s to protect consumers. Efforts were now being made to provide them with what we might call a living wage or with adequate income so they could become full fledged consumers. The government also under the new deal began to try to acknowledge the necessity of regulation of the consumer market. We will close with that and we will pick up against next week with the rest of the thirties. In 1934, the fdic was established. You guys are probably all familiar with fdic. It is a federal deposit insurance corporation. Its job is to ensure all of our deposits and all the banks around the country deposits today are insured up to what . 100,000 . They increased it to more than that . I think 2 50. You think its 2 50 now . You see where it started right . 5000. The government decided that in order to increase our confidence in banks, which when the bank failed all your money went away with it in 1929, that it would ensure our deposits and therefore guarantee to us, that even if the bank failed, we would still have access to our deposits up to a certain amount. The fdic has established in 1934 to protect bank depositors, we protect consumers. The food drug and cosmetic act is passed in 1938 and it is designed to protect consumers as well. It was designed in particular, to protect consumers against faulty claims about the efficacy of drugs. It was designed to protect consumers from poisonous substances of drugs. Many pharmaceuticals or still laced with arsenic. All sorts of poisons that could actually kill people. Cosmetics were full of poisons as well. The food drug and cosmetic act of 38 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. We had the department of commerce, the department of labour. Why not have a department of consumers . This is what they argued. But it did not go anywhere. Those efforts didnt go anywhere and in fact, it is not till 2011 that we see the establishment of i Consumer Financial protection bureau, which is quite controversial to this day. It was established in the aftermath of the mortgage crisis in 2007. What im taking you guys through is how the Great Depression itself is the crisis of abundance predicated on the fact that the wealth our country was generating was distributed in such equitable manner, that the majority of americans could not participate in the marketplace. They couldnt become the consumers that advertising, was encouraging them to be come with the business needed them to be. It necessitate at the politicize say shun of consumption in order to bring in comes up to a point where we could have something that we today call the American Standard of living. This American Standard of living could exist and could be reasonably aspired to. With that, i will close the class. Thank you. Hope you guys have a good weekend. Centers for Disease Control and prevention director doctor robert red field testifies before a House Appropriations subcommittee on the governance coronavirus response. Watch life thursday morning at 11 eastern on cspan 3, online at cspan dot arc, or listen live on the free cspan radio app. Thursday night on American History tv, a look at the american revolution. Beginning at eight eastern, historian park ranger and author philippe green malt discusses bostons role in the origins of the revolutionary war. His remarks focused on three pivotal events. The boston massacre, the Boston Tea Party and the battles of lexington. This was part of a daylong symposium cohost by the emerging revolutionary war block, gets these Tavern Museum and of elect alexandria virginia. Next, historian kirsten downey