Stuff. And it wasnt just americans who were in the situation but so too were our trading partners around the world. They didnt have enough income to buy all the commodities we were producing in our fields and all the wonderful things our factories were making. So by the end of the 1920s the American Economy went bust. You all know the stock market crashed in 1929 and 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 rose to be at the very center of american culture. And i keep telling you we need to consider politics, and today is the day we will think about how consumption became plit politicized. So heres a graphic that typifies the usual story that historians tell about the Great Depression. This is story im sure you guys have all heard at one point or another when you were juniors in high school in our American History class, if youve had other American History classes. Heres the typical story thats told. And 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 uneven distribution of wealth and on the overproduction. And 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 we talked a lot about this, an age of abundance had arrived in the United States by the 1870s. The ship 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 strasser, a crisis of distribution. So much was being grown and so much was being made not only the logistics for getting goods to market difficult but finding new markets were imperative. I asked you what were some of the things guilded age producers, farmers and manufacturers, whats are some of the things they did to solve this problem of overproduction, to find new markets . Yes, sam. Any type of description on the packaging. Okay, right, product differentiation, name brand, packaging. What else besides what sam has just listed for us . What else do they do to find new markets . Build a direct connection to consumer. Thats good. They tried to pass over the wholesaler, retailer, go right to the consumer. What else . There were so many things that we talked about. So we talked a lot about the shift from production driven marketing to what kind of marketing . Market driven production, and we see right here in this slide a great example of Market Driven production. Which item on the slide typifies and then we see that label that typifies the kind of packaging, the branding and packaging and differentiating of product. These are a number of things that producer steps they took in order to try to find new markets for all the commodities they were grow [all the goods being made in factories. But despite these incredible efforts 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 it delayed reckoning with this problem of overproduction. During much of the 1920s there were slight increases in purchasing power and that staved off reckoning with this power of abundance as well. World war i staves off the reckoning with the problem of abundance. And then the 1920s slight increases of purchasing power puts the problem off a little bit longer. But because prosperity didnt lift all boats sufficiently, at the end of the 20s the crisis of abundance erupted. This time generating more demand was impossible. It was impossible to differentiate products even further. All of the efforts sadver tizers went to add some kind of value to their product, but at a certain point theres no new markets to be found, no new demand to be generated. Americans wanted everything as far as i could tell, but they just didnt have enough money to pay for it. Let me first remind you about the economic boom of the 1920s. Ill just give you a bit of information about it. At the start of the decade, at the world war i ends at the very end of 1918, november 1918, and at the beginning of the 1920s the u. S. Held 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 a decade our gross domestic product, the gdp or Gross National product increased 40 so it increased 40 between 1920 and 1929. This is because agriculture nearly doubled. So the number of telephones doubled, the number of radios increased from 60,000 to 10 million. Part of the 60,000 is those 1920 radios were for amateurs, namely short wave radios whereas 1929 Everyone Wants a radio. Theyre a widespread consumer good. Thats incredible productivity. And there were more 160 times more electric refrigerators in 1929 as in 1920. Not only did productivity double over the course of the 1920s, so did wealth, so did prosperity. So 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 hear in the news or see in newspapers often abbreviated to cpi. So the cpi is a measure of what a Market Basket of basic goods might be. So a Market Basket of basic goods might be milk, butter, the kinds of stuff that an ordinary family, almost all of us would buy. Its a measure how much all that would cost at any given moment. And its taken as a measure of any living. During and shortly after world war i prices increased. They increased pretty dramatically. They increased by as much as 60 . And then in the postwar period, right, immediately after the war that big trough there, that was due to a postwar recession and prices plummeted, right . They plummeted well below 1914 levels. And through 1924 the prices steadily increased. And then theres a little dip, they rise a little bit more until 1926, and then they level off and they begin to move downward by beginning of 1929. If we look at increase in prices over the course of 1920s as a whole, so 1919 to 1929 so we see up and down, but as a whole inflation was only 1 . So very low rate of inflation in the 1920s. But between 1900 and 1920 the rate of inflation was extraordinarily high. So 1900 to 1914 prices increased by 17 . And 1914 to 1919 in five years prices increased by 16 . So although americans in the 1920s experienced a relatively flat rate of inflation over the course of the three decades the cost of living did increase. It doubled, more or less. So the price of bread, price of food, et cetera doubled. If we look ever here in the corner at the price of the model t you see a slightly different story. You see another trend, and thats what . What does the price of the model t do . It goes down. It drops pretty prucipitously, right . And what happens in 1913 that brings the price of the model t down. 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 the model t, the price of the other automobiles now to be sure there were some luxury automobiles whose prices increase, but one n only automobile prices are dropping, and prices for other durable goods are dropping as well. Like refrigerators, radio sets. Their price is decreasing over the course of 1920s and also over the price of semidurable goods like clothing and shoes. And these are precisely the goods, the things featured as the elements of the good life. We read the great gatsby for tuesday, for class on tuesday. And clothes and shoes and automobiles and telephones are featured as part of the life of these very rich people, right . And these items are not only featured as part of the lives of very rich people but mart of the good life that ordinary people should seek to obtain. So they were featured in magazine stories and advertisements and songs and movies, right . They were good life of what americans should aspire to. We see these expectations for owning these items being lifted by Department Store shelve windows, by advertising, by scenes in movies, by the lifestyles of celebrities. Now, when we talk about prices what were talking about is the cost of living. Okay, so write down prices, cost of living. But when we talk about expectations when we talk about expectations what were talking about is the standard of living, right . So prices, costs of living, expectations, standard of living. And 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 do without electric refrigerators, without automobiles, without colorful housedresses or matching bathroom towels or all of the things weve looked at and thought about. Increasingly, though, these luxuries were coming to be seen as decencies. So as decencies they are coming to be considered the birthright of all american citizens, something all american citizens had a right to claim, to wish for, to want. So lets think about this. So despite historic levels of economic productivity so we have historic levels of economic p productivity. Many americans were forced to live on the edge. They were making do. They were like George Wilson who you see here from the great gatsby. They were living in the ash heaps, right . Now, theres a lot of disagreement. No scholar has figured out exactly how Many Americans were living in poverty in the 1920s. There wasnt an official bureau charged with collecting statistics, theres no agreement today what constitutes living in poverty or living out of it. So ive looked and ive seen some scholars estimate that 70 of all americans lived in poverty in the 20s. That would be seven out of ten americans. Others say it was only 12 , that would be 2 out of 10. I think both those estimates would be extreme. I think the best guess is about a third. About a third of americans were living in poverty. 20 or so were probably near the line, maybe they were above poverty, but it was pretty rough. Life was a struggle for them. So what do you guys notice from this wage chart . How do the farm workers wages look . Like the unskilled workers, but theyre based on seasonal work, so their per year total is significantly lower than any of the unskilled workers. Right. So you see their yeary total is 357. Its estimated it took about 2,500 a year for a household to live a decent standard of living. So we can see even with the skilled workers this september an easy time for them, although 1500 seems a lot better than a 300 figure. Anything else you guys notice for these wages . Are they going up . For some, right, and then they kind of flatten, right . Inwe were to take these wages and compare them to prufbtativiprufb productivity, productivity doubles in the space of ten years. But wages do they double . Not even close. So the wages arent keeping up with pruativity at all. And what this suggests is that working americans were not receiving a significant or fair share of the wealth. Lets think for a minute about the distribution of wealth. Its probable something you guys have heard about in the news a lot today. In the 1920s the 1 the top 1 held about 24 of the nations wealth. The top 1 holds 24 of the nations wealth. So we have the 1 and the next 9 . The next 1 held the next 26 of the nations health. So the top 100 has a quarter of the nations wealth. As a whole the top 10 hold 50 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 held about 45 of the nations we nations wealth, 44 . 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 unequally, we dont need to think about the present moment, we will consider the 1920s ear. But the distribution of wealth was incredibly unequal. And so as a prominent intellectual, an activist named w. E. B. Debois. Hes looking at this situation. He didnt have access to the kind of statistics but its clear to him that something is very wrong, and hooobserveled and this is quote from him. We have today in the United States cheek by jowl prosperity and depression. Cheek by jowl. Just like this africanamerican newsboy. Hes selling a penny newspaper, and the penny newspapers headline is proclaiming a tax on billionaires or dissent over this billionaires tax. This is from 1921. Not only were most minorities impoverished but so too were farmers. Farmers were impoverished and they made up about 30 of our population. So too were coal miners and unskilled laborers. We have a vast proportion of americans who are essentially impoverished. So weve looked at this distribution of wealth. Despite the slow ratef inflation prices arent changing. Most americans didnt earn enough to buy the necessities and didnt earn decencies or any luxuri luxuries at all. You have incredible levels of economic prutiskt, Rising Consumer expectations, but you have wages that dont the pace at all. So up, up, up goes prutiskt but wages are here, theyre flat and in some cases going down. What did americans do about this . So let me make some generalizations for you first about how individuals and communities handle it when they cant pay for their needs and their wants. Now, 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 some of the things, what are some of the strategies . Youre college students. I bet you want many more things than what you can pay for. Maybe you need some things you cant pay for, too. What might you do . Yeah, henry. Substitute with other products or items or you may resort to stealing what you need. You might steal. You might substitute. Okay. Right. Okay. Good. I like these ideas. Yeah. Amelia. Take out a loan. You could take out a loan. Right. Okay, take out a loan, get some credit. Get a credit card. Okay. What else might you do . Yeah. Move in with friends. Like for saving in that sense. Right, so you budget. You could cut costs by pooling your resources. Share a textbook. Move in with friends. Share a car. Take the bus. You can economize in all sorts of ways. We have taking out loans, weve got stealing. We have economizing. What else . You could work more. Okay. Presumably minimum wage kind of thing. You could get another job, babysit. You could tutor. There are a zillion kids in this town who need tutoring. You guys could tutor, babysit, take a minimum age job. If youre over 21, you could bartend, wait tables, all sorts of things you could do to add to your income. Now, henry and logan suggested ways of sort of economizing or sort of trying to substitute trying to stieffle your demands. You could eat less, right . When i was in my first year of graduate school, i didnt have very much money so i ate a lot of ramen noodles. 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 have what we have just sort of laid out here, these are commonsense strategies. Theres nothing new about what you might come up with about how to make your 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 didnt mention. That americans started to do, and thats trying to control prices. So the first thing that you might do if your needs and wants, if your income doesnt meet what you need or what you want is you could protest prices, right . You could engage in collective action to try to prevent inflation, try to prevent rising prices. So thats the first thing. Okay, so write that down. First thing. The second thing you can do, which you guys have sort of indicated is you can try to stifle demand, right . You could try to make do. You could spend less. You could try to expose yourself less to all of those stimulants that make you want things. You could stop internet shopping, right . For instance. And then the third thing you can do, and this is taking out a loan or getting a job, is you can try to increase your purchasing power. You can try to add to your income. So what did americans do in this period between 1900 and 1930 . Well, 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 to control prices when theyre not going up. So theyre not trying to control prices in the 1920s. And in fact, for the most part, they were really relieved the war time inflation of 60 was over, and they were relieved prices had returned to prewar levels. So 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 housewives said were not going to buy it at all. And it wasnt just an individual boycott. Thats fine, if i choose not to buy meat and eat beans, nobody is going to change the price of meat, right . But if all of us in dallas said were not buying meat until you decrease the price by 25 , we might get through to them, right . And so this is precisely what housewives did in 1908, 09. They boycotted butchers to protest the high price of meat. And heres one that maybe will inspire you. They refused to pay their rent. And these were called rent strikes. Now, a rent 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 going to have a hard time finding 28 people to fill all of those apartments. So a rent 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. And at the same time, the government during world war i, during the war, the government recognizing that inflation was out of control and that there was going to be rioting and worse, if they didnt bring it under control, put price controls on food and on fuel. So there was some government regulation of prices. Okay, so were talking about how to balance income with needs. So weve talked about controlling prices. No need to do so in the 20s. What about controlling demand . What about controlling demand . So stifling expectations, spending less, hardly requires collective action, right . Hardly requires strikes, boycotts, and riots. This is more of an individual response to the problem. Okay. 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 another. They didnt just buy everything they wanted. They did not buy a new refrigerator every year or a new automobile every year. Let alone all those other bobbles and gadgets that were becoming available. But americans didnt engage completely in selfdenial either. Instead, what they did, and this is what you guys sort of indicated when we started talking about this, is they stretched their dollars. They were creative. They were ingenious. In ways to stretch their dollars. They made their own food. They made their own clothes. So we see here pattern from the mid1920s. Many women made their own dresses, made clothes for their children. They sewed their own clothes, trying to be a la mode in the fashion of the day, but they made their clothes rather than going to the Department Stores and buying readymade clothing. They made their own food. They canned their own tomatoes, their own vegetables. They made applesauce. They put them away for the winter and engaged, and thereby didnt have to buy the heinz canned tomatoes or all of those other canned goods that were available at the a p. Americans saved, and they budgeted. There was a tremendous interest actually in household budgeting during the 1920s. And they traded, and they bartered. They traded eggs for a homemade dress. They bartered, they traded services amongst each other. Sometimes they resorted to stealing. And they bargain shopped. They went to secondhand stores, and they bought things on the black market. So these are just a few of the ingenious ways that americans tried to stretch their dollars. But it didnt work. Didnt work entirely. Because there is 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 tried 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 5 a day, which in 1914 was twice the wages of all other automobile factories. Then in the 1920s, ford increased his daily wage to 6 a day, and interestingly, after the stock market crashed and the economy went into decline, ford raises wages again to 7 a day. Of course, he laid off a lot of works, but those who were lucky enough to keep their jobs were getting 7 a day. This is because 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 you could raise your wages besides working for ford or finding a higher wage job. You could raise your wages by uni unionizing. I go to president turner and i complain about my salary. Its not going to make any effect, right . Hell 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, thats not going to do anything. But if all the faculty at smu engaged in collective action, we would likely see an increase in our salary. Just as if all of you engaged in collective action, you would probably see a decrease in tuition. This is airing on national television, so here we go. I have now called for collective action. Okay. The point is that unions give laborers more Bargaining Power than when a laborer stands by himself or herself. And so americans formed unions, and they went on strike. They went on strike after world war i. 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 an awful lot of strikes. Wages, because wages didnt match the pace of the increase in the cost of living. For the rest of the 1920s, however, we see very few strikes. Very little in terms of collective action. Okay, so we can try to get a higher paying job. That would be one way to increase your income, right . Another thing you could do, you cant get a higher paying job, is you could send more members of your household out to work, right . So you could send more members of your household out to work. You could send your children and your wife to work. You yourself could take extra jobs, right . So instead of working one job, you might work two jobs or three jobs, take extra jobs. You could do side jobs. You could engage in criminal activity. Right . You could bootleg. You could smuggle. You could engage in the black market. All of these things might increase your income, your household income. So you can try to increase your individual income, you can try to increase your household income, and theres a third thing you can do. This is what amelia suggested, and this is definitely the american way by the 21st century, right, and thats you can take a loan. You can borrow money. So all of these things americans engaged in. Now, lets look backward for just a minute. I want to introduce you to an important concept, and this is a concept of pocketbook politics. I think its an i. D. Term. It is an i. D. Term. Okay, good. If we look backwards at various moments during the 19th century, americans so during the 1800s, at various moments, americans protested high wages. They did not protest high wages. I misspoke. They protested low wages and high prices. 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, so usually the activism in the 1800s was directed at employers or at merchants. So its directed, very directly, or setting the prices. It was not directed at the government. The activists did not march in washington, d. C. And ask congress and the president to raise wages or lower prices. It didnt occur to them there were Political Solutions to these economic problems. They sought instead Marketplace Solutions for their economic problems. Okay, this is the 19th century. Around 1900 or so, 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 insure access to basic living standards. And you guys can immediately think of the measures that our government takes to this day to do those things, to control inflation, to insure access to basic living standards. Thats what welfare and food stamps are, right . And 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 kind of politics entered into 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. And this is in spite of the fact as Calvin Coolidge famously said, the business of america is business. But thats exactly what coolidge meant. He meant the business of america is business. He didnt mean the business of america is taking care of consumers. The business of america is making sure that people have adequate income and wages. He meant the business of america is the business. The 1920s, the department of commerce flourishes in 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. And so it didnt concern government didnt concern itself with purchasing power. And americans, as i said, didnt engage in collective action. There were hardly any strikes. There werent any protests, and there werent any communal efforts to make up for this difference between wages and wants. So we just sort of muddled along through the 1920s. We muddled along. Now, the dormancy of pocketbook politics in the 20s was due in part to the slow rate of inflation. Right . You have a slow rate of inflation, so people cant complain about rising prices. And it was also due in part because Consumer Debt became more widely available. So Consumer Debt, Consumer Loans, rather, became more widely available. Consumer loans became more widely available. As you can see here, over the course of the 20s, Consumer Debt nearly tripled. So you have 3. 3 billion in debt in 1920. And this Consumer Debt includes home loans, includes mortgages. And by 1929, its 7. 6 billion in debt. Okay. So where did americans get their loans in the 1920s . Who lent them money . On your handout, i have included this list for you. But lets just talk it through for a moment. Who lent them money . So credit, like always, credit is always available from family and friends. Until youve tapped those markets out, right . Family and friends. Secondly, pawnbrokers. So americans frequented pawnbrokers and received small amounts of credit. There were also smallloan lenders. A smallloan lender is sort of like the payday lenders that are so prevalent today. They make small loans, garnish your wages, in order to with very high interest rates. Manufacturers also offered Consumer Credit, and they did so with installment plans. So if you wanted to buy an automobile or a piano or a kind of durable good, electric appliance, sewing machine, bicycle, you could buy it with installment credit. Fifthly, retailers offered credit. They began to offer charge accounts for the wealthy, and you see here on the slide a budget account from wanamaker. It was the leading Department Store in philadelphia. It was the niemanns of philadelphia. And in order to encourage wealthy clients to have charge accounts, they used the term a budget account. So as to make it seem like something thrifty and worthwhile and something good. Right . A budget is good. Credit, right . Bad. So they called it a budget account rather than a credit or a charge account. And a Department Stores began to issue little tiny charge plates, they looked like dog tags, to wealthy customers so they could use them without having to go through the sort of laborious process of calling the finance department and so on. Retailers are offering charge accounts for the wealthy, and theyre also offering installment plans for everyone else. These installment plans sort of took the shape of layaway. Do you guys know what layaway is . Layaway. So you identify a pair of hiking boots you really want, but you dont have enough money for them. Youre worried theyre going to sell out, so you put 10 down. And they hold on to the hiking boots in the store until you paid them off. Each week, you come 92 the store, you pay a little bit more on the hiking boots, and then once you have paid it off, you get to take them home. Now, thats really different than the way we buy hiking boots today. Right . How do we buy hiking boots today . I go to rei, if i dont have money in my bank, what do i do when i find those boots that i want . Put it on your credit card. I put it on my credit card and i get to take them home, right . Its a rely different kind of relationship. Its credit but its a different kind. Layaway was prevalent through the 1970s. Do people still do it today . Is there still layaway . Yeah. Yeah, for what kind of like large purchases at generally like at big stores like target or walmart i think will offer it. And 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 you pay it back. That youll pay it back, right. Its a different kind of relationship between the retailer and the shopper. Okay, so we have we have the last source of Consumer Credit would have been banks. Banks offered Consumer Loans for the wealthy, so 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 theres 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 smallloan lenders, and that would have been credit issues just to get people by 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. So an economy is productive as the American Economy just couldnt 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 fullfledged consumers. So now were back. Now were back, i have brought you to the point where we can think about the Great Depression. Where we can think about what happened. And im fairly certain you guys can figure out the answer at this point or the answer im proposing. The answer that makes sense for our class on the history of consumer culture. The Great Depression was a crisis of abundance. It was a crisis of abundance. We, the United States, had figured out how to grow and make a tremendous amount, an array of things. We could make so much stuff and so many different things, and we had figured out how to market these goods. We had figured out literally how to get them to market. We figured out new forms of retail, new kinds of advertising. We figured out how to market these goods, but the one thing we hadnt figured out yet, that kind of third leg on the stool, was how to provide americans with the means with which to buy all this stuff. Figured out how to make it, figured out how to get it to market, but we hadnt figured out yet how to get people the means to buy all this stuff. And this was a political question, right . This is a political question then. Its a question that socialists and communists and marxists had been asking since the 1870s. They had been asking this question since the 1870s, and they continue to ask it, right, into the 20th century. Revolutions were premised on this question of how to give people adequate purchasing power. The mexican revolution in 1910, the Russian Revolution in 1917, so this political question was being asked, but the kind of answer that socialists and communists and marxists were giving was not an answer that americans were want to give, right . Were not going to just dismantle the capitalist system. It was working pretty well. 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. Lets look first at farming. So farming, farming had been in a depression since the end of world war i. They had been in a depression that was just as terrible as what we would see in the 30s since the end of world war i. This is because during the war, during the First World War, farmers expanded acreage. They expanded production because there was so much demand for american agricultural commodities, as you might imagine with all of europe engaged in war, there wasnt a lot of room for them to grow the crops, so there was tremendous demand for our commodities. Prices went up. That 60 increase in prices was so terrible for the american people, 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 continued to expand it. They continued to put more acres in cultivation. They continued to improve methods of cultivation. They continued to mechanize all these things that are going to increase productivity. As a consequence, 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. Its not a good situation to be in if youre a farmer. Terrible situation. There was no amount of branding, theres no amount of packaging, no amount of marketing that could have raised the price for agricultural products. There were just too many. Okay. Now, manufacturing was a little better off. There wasnt 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 talked about how saturation was leading advertisers to more and more desperate measures. So there were signs that inventories were beginning to accumulate. And 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. Warehouses were full of automobiles, full of radio receivers, full of refrigerators, full of watches, full of clocks, full of bathroom fixtures, matching towel sets, you name it. Warehouses were full. Bales of cotton like the ones you see here filled sheds, waiting to be spun into thread and made into cloth. Back rooms of stores were stacked to ceilings with unsold inventory. Cattle and livestock crowded pens. Youre not going to sell youre not going to take your cattle to the slaughterhouse unless theres a market for it, right . So the pens were crowded with cattle and with livestock, and they needed to eat, so you had to continue buying feed for them. Grain silos were at capacity. And so the problem of distribution had reared its head again. This could describe the 1870s, different products, right, but the same kind of problem of oversupply. As i have said, americans were all too willing to buy, but they didnt have the purchasing power. And neither did our trading partners in latin america and in europe. They had even less purchasing power than americans. So this is early 29. Now, some observers had noticed 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 marked tet begins to sl. It begins to slide in early october. A really interesting story. Not important for this class, but ill give you a snippet of it. It begins to slide in early october. You see daily losses in the stock market. Then in midoctober, the london stock market crashed. It collapsed. And American Traders bedan to sell off their holdings frantically. There were various actions taken to try to prop the market up. But on monday, october 28th, the market lost 13 of its value, and then next day, it took another beating, losing another 12 . In two days, it lost 25 of its value. These are known as black monday and black tuesday. Okay. 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 in 1987, the market was overvalued. There was a lot of speculation. And there was a lot of what was called buying on the margin. This means buying stock without with only 10 , putting only 10 down. Then hoping you would be able to sell the stock off at a higher price than 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. 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 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. So we often when we talk about the Great Depression because 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 these deeper underlying problems. And it exacerbated problems. Okay, so what are these . Lets see how were doing on time. Okay. 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. There are runs on banks, and the banks collapsed altogether. Banking wasnt regulated at all. A bank didnt have to secure its deposits in any way. And so as a consequence, 9,000 banks collapsed altogether. I am showing you here a paper from a mortgage, from what was called a balloon mortgage issued in 1928. Now, 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 overinvested in automobiles, as you see here. Overinvested in automobiles. Its overinvested in construction. And it had very weak sectors. So there 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 of this overinvestment in Certain Industries and these very weak sectors meant that the economy was quite vulnerable when the crash came. And now were back to those big inventories that had piled up. No one was spending. American consumers were saturated or they were poor. There was no amount of super advertising of competitive copy or increased 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 crashed, but interestingly, Consumer Debt did not soar. In fact, people began to pay off their loans. And what was discovered was that in bad times, people borrow less, not more. And this actually spurred the development of Consumer Credit. It spurs the legitimization of Consumer Credit and allowed in the 1930s and then after world war ii the vast expansion of Consumer Credit when it was realized that people would try as hard as they could to pay off their loans. And in fact, the installment loans that americans had that they had taken out and that were still open in 19291930, americans worked very hard to try to pay those off. There were very few defaults on installment loans. There was only one sector of the economy in which there were a lot of defaults in terms of Consumer Credit. Which sector . Pardon . Farming . Well, okay, so farmers definitely did default. What kind of loans did farmers and others default on . Largely because the balance was so big, they defaulted on mortgages, right . Good. They defaulted on their mortgages. Largely because they couldnt pay them off. They couldnt come up with the 25,000 to pay that loan off, and unlike our loans today, our mortgages tend to be for 15 years or 30 years. And at the end, you have paid your whole house off. These loans were for a much shorter time period, and there tended to be a large balance due at the end of the loan period. You just would refinance it, but nobody could refinance their loans, so there are huge defaults in the mortgage sector. In all of the other sectors, it defied expectations. People paid their loans off. Okay, so the economy grinds down to a halt. Okay. You have high rates of unemployment, and things only went from bad to worse. So the Gross National product decreased by 30 . Unemployment goes up to 25 . Wages fall, if you are lucky enough to keep your job, wages fell. Banks fail. 100,000 businesses fail. Construction starts to drop 78 . Corporate profits from 10 billion to 1 billion. Its a bad time. A really bad time. Interestingly, with all of this, interestingly, prices did not drop. They didnt drop very fast. Prices held steady. Which is very interesting. And as part of the reason why were going to see the pocketbook politics come back to life in the 1930s. So after the economy collapsed, the nation limped along. Hoovervilles like this one popped up all over the nation. And 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 stopped going to college. They economized, bargain hunted, second hand shopped, they stopped spending, and they became politicized. Americans became politicized. They sought Political Solutions to their economic problems. Pocketbook politics came of age. So in the last bit of class, i want to kind of take you guys through what these pocketbook politics looked like, what did they look like . What was the shape that they took . So its no surprise at all, i think anybody could have been elected in 1932 over herbert hoover, so its no surprise at all that the democrat, Franklin Delano 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 it sought to save capitalism. That was their goal. To save capitalism and to save democracy. And they sought to do it with something called the new deal. Okay, and they sought to do it with something called the new deal. And the new deal was a huge, huge, huge array of legislation, the belief was that government legislation could solve problems. And the new deal was an alphabet soup of legislation that we could divide into three categories. The three rs. Youre going to remember this. The three rs. 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 that was meant to reform the economy so that these problems wouldnt happen again. In the very earliest years, fdr is elected november 1932. Hes not inaugurated until march of 1933. In the very earliest years of his administration, new dealers, the people who work for roosevelt, new dealers encouraged placing limits on production. Now, think about this. One of the causes of the Great Depression, of this economic collapse, was this incredibly high rate of productivity. And remember how we talked about in the gilded age, efforts to limit competition so as to control supply . Right, so monopolies are formed. Trusts are formed. Pools are formed. As a way for producers amongst themselves to agree to kind of cap productivity so that they could actually make a little bit of money in the marketplace. This has brought back to life again in 193334. The new dealers begin to encourage voluntary limits on production. And this was meant to address this problem of oversupply. Now, as you guys might imagine, these encountered resistance, for all sorts of reasons. 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. Government cannot do that, in our country at least. I should say farm subsidies were paid to farmers in order to encourage them to take land out of production, so 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 comaumcommod. 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, it price might rise. These farm subsidies are still actually in effect in various sorts of ways. This is how we support agriculture in this country. But these measures taken to take land out of production in the early 1930s received a great deal of criticism, as you might imagine, because Many Americans were starving, 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 with limiting production. Theres just thats just not going to work. So lets look at what the new deal did in order to expand purchasing power. So there were a lot of shortterm measures taken that would bolster income through work relief programs. These are part of that relief legislation. So these are shortterm measures taken to bolster incomes 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 wins. Government, of course, had to engage in deficit spending in order to do this. And it relied on an economic theory called keynesianism in order to justify this expenditure. This included all sorts of programs, civilian conservation corps, which sent young men out into Americas National parks. It served two purposes. It gave them income, but it 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, the most likely to cause problems. So it was a brilliant move to send them all away, 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 the Tennessee Valley authority, which was meant to electrify, build dams, and improve the infrastructure of the Tennessee Valley. You have all these pub lrk woli programs which culminated with the wpa, 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 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 relief programs. These are shortterm measures. They dont last forever. The new deal also introduced longer term measures that were meant to lift incomes, that were meant to lift wages. And these, im going to focus on three for you. The first is what was known as the wagner act. The wagner act, the official name is the National Labor relations act. The National Labor relations act. And it is on your list of i. D. Terms. 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, allowed it 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 seek higher wages. It was a very effective for quite some time. The second measure that was taken in order to increase incomes and wages was the passage of the fair labor standards act. The fair labor standards act is 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. So its minimum wage and maximum hour 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. Thats 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. And 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 mortgages appeared to be a safe business. And americans showed themselves to be willing to pay off their debts. There wasnt a debtors crisis, and the federal government got in the business of underwriting and offering Consumer Loans. Most importantly, through the federal housing administration, the fha. The fha issued loans for the construction of new houses and for the renovation of old ones. In between 1934, when the fha is established, and 1960, it financed more than 10 million homes in america. Its still in operation to this day. The holc, the Homeowner Loan Corporation provided loans to people who couldnt pay off their existing mortgages. It provided loans in a time when mortgages were practically unavailable. Now, a few new deal agencies, only a handful, not very many, made direct Consumer Loans. Mostly to farmers and to People Living in rural areas. These are not very important, but theyre 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 made loans to people to buy electric appliances. The tva, 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 that use electricity, what is the good of having electricity, and how are the electric Companies Going to make any money . So the electric home and Farming Authority issued loans so people could buy appliances and electrify their houses. The resettlement administration, which was an organization, an agency meant to help displaced farmers find new homes, also made Consumer Loans. And here, you see some pictures of folks paying off those loans. These pictures are very important to try to gain legitimacy for these types of programs, by showing that people would pay the loans. Okay. The efforts of the new deal the efforts that the new deal implemented to bolster purchasing power had longterm effects and significance. Pocketbook politics played a very Important Role ever since an american elections and in governance as well. So i want to end class today by just drawing your attention to some of the efforts made in the 1930s 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 fullfledged consumers, but the government also under the new deal began to try to acknowledge the necessity of regulation of the consumer market. And so well close with that, and well pick up again next week with the rest of the 30s. So in 1934, the fdic was established. You guys are probably all familiar with the fdic. It is the federal deposit insurance corporation. And its job is to insure all of our deposits and all of the banks around the country deposits today are insured up to, what, is it 100,000 . They increased it to more than that . I think 250,000. You think its 250,000 now. You see where it started, with 5,000. So the government decided that in order to increase our confidence in banks, which had all failed, and when the bank failed, all your money went away with it in 1929, that it would insure our deposits, and therefore guarantee to us even if the bank failed, we would still have access to our deposits up to a certain amount. So the fdic is sestablished in 1934 to protect bank depositorsedepositors , to protect consumers. The food and cosmetic act is passed in 1938 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 and drugs, many pharmaceuticals were still laced with arsenic, with all sorts of poisons that could actually kill people. And cosmetics were full of poisons as well. So the pure 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, but most of them failed. So a number of activists called for the establishment of a consumers bureau. So it had we had the department of commerce, we had 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, and in fact, its not until 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 the 07 mortgage crisis. So what i have taken you guys through is how the Great Depression itself was a crisis of abundance predicated on the fact that the tremendous wealth our country was generated was distributed in such an inequitable manner that the majority of americans couldnt participate in the marketplace, couldnt become the consumers that advertising was encouraging them to become, and that business needed them to be. And that it necessitated the politicization of consumption in order to bring incomes up to a point that we could have something that we today call the American Standard of living. Right . That this American Standard of living could exist and could be reasonably aspired to. So with that, ill close the class and thank you. Hope you guys have a good weekend. Youre watching American History tv. Every weekend on cspan3, explore our nations past. Cspan3, created by americas Cable Television companies as a Public Service and brought to you today by your television provider. Weeknights this month. Were featuring American History tv programs as a preview of whats available every weekend on cspan3. Tonight, professor mark burns explorred public opinion, the rise of radio, and the debate over entering world war ii. He outlines the arguments and uses radio clips to demonstrate the role they played in shaping american views and foreign policy. Watch tonight, beginning at 8 00 eastern. Enjoy American History tv this week and every weekend on cspan3. Up next on lectures in history, Iowa State University professor pamela rineykehrberg teaches a class on food during the Great Depression. She describes the ways families tried to stretch their money and food supply, often by gardening, buying cheap ingredients, and eating the same meal over and over. Her class is about 50 minutes