![]() ![]() In many pretty houses, wives who had never before-in the revealing current phrase-“done their own work” were cooking and scrubbing. These people were discharging servants, or cutting servants’ wages to a minimum, or in some cases “letting” a servant stay on without other compensation than board and lodging. Here’s how Frederick Lewis Allen described this in his book about the aftermath of the 1920s:Īmong the comparatively well-to-do people of the country (those, let us say, whose pre-Depression incomes had been over $5,000 a year) the great majority were living on a reduced scale, for salary cuts had been extensive, especially since 1931, and dividends were dwindling. 2 It was mostly the wealthy class who were invested in the stock market at the time but even with the market crash, the Great Depression had a far greater impact on the lower-income class. There were only 1.5 million or so people invested in stocks in 1929 or a little more than 1% of the US population. So when the crash hit, all those noobwhales who jumped in when things were good surely rushed to the exits when things got bad. When stocks and valuations rise as fast as they did in a period such as the late-1920s 1 the initial reaction from most people who follow the markets would be that “everyone” must have been invested at the time. When the Great Depression hit, the stock market crash decimated investors, with stocks falling upwards of 85% in less than 3 years. If the Gilded Age set off a new era of wealth inequality, the roaring 20s kicked it into overdrive. They further estimated that nearly 60% of American families had incomes that placed them below the poverty line. And more than 70% of families lived on less than $1,000 a year. As the country was just about to head into the Great Depression in 1929, Brookings Institution found that just 2.3% of American families had incomes of more than $10,000 a year. Unfortunately, by the end of the decade, most of the gains had once again gone mainly to the wealthy class. It was another period of massive technological innovation with the addition of cars, telephones, movies, radios, and appliances to the consumer landscape. ![]() economy would go on a tear unlike it had ever seen in the roaring 1920s. Andrew Carnegie made 20,000 times that much the very same year.įollowing the Panic of 1907 and depression of 1921, the U.S. The average annual wage of all American workers in the year 1900 was in the range of $400-$500. This period also ushed in a huge influx of the working class, but it was mainly a small handful of the upper class that built vast fortunes on the backs of the working class. These titans of industry would usher in the Gilded Age, a period of rapid economic growth, technological innovation, and industrialization. Pierpont Morgan (1837) and John Rockefeller (1839) all built their empires following the post-Civil War industrial economic boom. Many of the wealthiest business magnates in history were born in the same decade, proving timing can be everything when it comes to building empires.Īndrew Carnegie (born in 1835), Jay Gould (1836), J. This is the story of why that time was different and how World War II radically altered the economic landscape for years to come. WWII is an economic anomaly that changed the trajectory of the United States for years to come in terms of growth, jobs, income, demographics and wealth inequality. There was a minor recession in 1945 but never a crash that sent the system reeling. We got the war-time prosperity and inflation but never the deflationary depression on the other side. The World War II economic playbook started out the same way:īut the cycle changed in the aftermath of WWII. You could basically set your clock to it. A deflationary depression would follow and then the cycle would start all over again with the onset of the next war.Prosperity would inevitably be followed by a hangover once that spending dried up when the wars were over.All that spending would eventually lead to an inflationary spike. ![]() This spending would increase wages and earnings, thus leading to prosperity. ![]() Governments would ramp up spending during wartime.For almost 150 years, one of the most important variables in the economic cycle was war. ![]()
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