Prosperity in the 1920's under Coolidge and Hoover

Two years before the great crash of 1929 and the onset of the Depression, President Calvin Coolidge
declared that America was entering a new age of prosperity. In 1928, Herbert Hoover campaigned
on the slogan A chicken in every pot and two cars in every garage. Journalist Thomas Stokes wrote
Chip Off My Shoulder (1940) in which he observed that, America was off down Prosperity Road, a
road filled with shiny new automobiles and new little houses Everyday Americans that believed
poverty was about to be conquered, however, never realized the impact of ephemeral wealth.
Optimism and the Building of an American Economic Utopia
The 1920s was a period of economic growth, fueled by federal tax cuts, notably for those earning
more than $100,000, as well as installment buying that enabled ordinary Americans to drive the new
cars and fill their homes with labor-saving devices.
It was a period without any regulation of businesses or banks. It was a time of optimism that
encouraged even the most modest wage earner to invest in the ever-rising stock market.
Coolidge Prosperity was dominated by a colorless and bland president. America was isolationist,
protectionist, and shielded by a conservative http://www.uslegalforms.com/realestate/ judiciary
favoring the rights of business. Coolidge recommended privately that the Federal Reserve Board
curb the expansion of credit, but his Cabinet and advisers were all big-money men who viewed any

such attempts as a retreat of capitalism.

The Lack of Presidential Leadership in the 1920s
Both Coolidge and Herbert Hoovers greatest flaw was their inability to act as leaders. Both men
viewed their national roles as managerial rather than presidential. When depression emerged and
millions of Americans lost the security of jobs and homes, Hoover believed that the
http://www.botaniqueatbartley-uolgroup.com natural course of events would force a correction and
return the nation to prosperity. This is as it had always been during the many panics of the past.
Prosperity did not Extend to all Sectors of the Economy
Between 1920 and 1929, American production increased dramatically as did population. Population
rose from 106 million in 1920 to 122 million in 1929. At the same time, the cost of consumer goods
fell, enabling more Americans to purchase newly produced commodities. Within six years, radio
sales increased by 7,440,000 sets. Average hourly wages, however, did not reflect these increases
and only rose one cent from 0.56 in 1920 to 0.57 in 1929.
Dramatic decreases in real estate were also evident, dropping over 30% between 1920 and 1929.
Although farmers were suffering and workers failed to make substantial gains in wages, corporate
net income nearly doubled during the same nine-year period.

Stock market shares rose from 227 million shares in 1920 to 1125 million shares in 1929, but the
average dividend fell during the same period by almost half. This statistic alone demonstrates the
over-valuation of many stocks.
When the market collapsed, many investors lost millions, but so did ordinary Americans that had
been encouraged to invest, particularly those working for corporations that pushed employee stock
purchases.
The Chasm between Rich and Poor in America
Prosperity in the Coolidge years did not eradicate poverty or end in a capitalist Utopian ideal. A May
11, 1968 article in the New Republic declares that, The rich stay rich in the U.S., and the poor, poor,
and the gulf between them hardly changesMillionaires who pay no taxes, and poor people who go
hungry this disparity is the most dangerous social fact in America today.

Although conditions in the 1920s were

very different from those in 2008,
parallels do exist. Americans are losing
their homes, unemployment figures
remain constant, more Americans than
ever receive food stamps, and one of the
raging debates concerns tax cuts for the
wealthy. A March 3, 2011 MSNBC poll,
for example, demonstrated that a tax
surcharge on millionaires was favored
by nearly 70% of those polled.
The 1920s was an example of false
optimism fueled by an inherently flawed economic system. This is not a criticism of capitalism or the
free-market system, but an evaluation of a system that refuses to police itself or see the signs of
future problems tied to current greed. Additionally, the 1920s demonstrated a need for solid national
leadership, especially when the crisis began. Neither Coolidge nor Hoover represented that
necessary strength of leadership.
Sources:
Historical Statistics of the United States, Colonial Times to 1957, Government Printing Office,
1960Thomas Stokes, Chip Off My Shoulder (Princeton University Press, 1940)George Soule and
Vincent Carosso, American Economic History (Holt, Rinehart and Winston, 1957)T.R.B., The Rich
Always with Us, New Republic, May 11, 1968Gordon Thomas and Max Morgan-Witts, The Day the
Bubble Burst: The social History of the Wall Street Crash of 1929 (Penguin Books, 1979)