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The U.S. to the CRASH of 1929
More on the Economy during the Coolidge Presidency
1928 Fords. Click for more
Unemployment was low -- calculated at only 3.2 percent. And during the years of Coolidge's presidency many people saw their lives as better than their parents' lives had been. Real wages for the skilled and unskilled were higher in the twenties than they had been at the beginning of the century, and real wages meant an improved quality of life. In general, the poor were healthier than they had been in previous decades. But this did not obviate the fact that many in the United States were still overworked and had to endure poor working conditions. The United States was a large nation with a broad economic spectrum.
On the lower end of that spectrum, many had incomes too small for buying beyond bare subsistence. People working in coal mining and the textile or leather industries were suffering. Among the working poor were those who, if they were frugal and unburdened by health problems, could save a little money to invest in property or in advancing themselves in other ways. But they were a minority among the poor. As good as things were under Coolidge, a better distribution of wealth would have strengthened the economy -- the kind of better distribution that would come in the better economic times of the forties and fifties.
Manufactured goods still cost a lot more relative to family incomes than manufactured goods would in decades to come. And many families had incomes too low to afford labor saving devices such as vacuum cleaners and washing machines. A washing machine, for example, cost from 60 to 200 dollars, while the average factory worker was earning only about 100 dollars a month.
There were no food stamps, which would have created the greater demand that farmers needed for their products. There was still no social security as income for the elderly. There was no unemployment insurance. Often people were taking care of their own unemployed family members such as their elderly, their brothers, brothers-in-law and otherwise -- a compelled family togetherness.
The ability to produce had increased, but the ability to consume was limited. This had happened with grain production and the tractor in the early twenties. The supply was so great that the drop in grain prices hurt farmers. And the farmers responded by increasing production even more.
In manufacturing, businessmen were encouraged by a growth in sales. They were optimistic. Many who were warned about market saturation laughed. What was market saturation? For example, the number of people lacking alarm clocks had declined. And many who could afford cars had cars, with not enough people willing or able to buy a new car every year. Market saturation was not a concept readily understood. Want was infinite, but the wealth to buy was not. Over-production and declining profits was not a widely recognized phenomenon. Enthusiasm and optimism were patriotic, and the economy appeared healthy to many market watchers. But by 1927, production in the United States began to decline, most notably in automobiles and in building materials such as steel, rubber and other materials for the automobile. Home buying and home building were also down. Not enough people could afford to buy a home. Too many people were paying rent rather than making payments on their own home -- a benefit to landlords, but for common people an unfortunate distribution of wealth upwards.
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Copyright © 1998-2005 by Frank E. Smitha. All rights reserved.