jazz economy

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----------- In their optimism...[they] were taking their cue from no less than the country's leader. "Ours is a land filled with millions of happy homes blessed with comfort and opportunity," declared President Herbert Clark Hoover in his inaugural address to the American people on March 4, 1929. "I have no fears for the future. It is bright with hope!"

But on that sunny, cold day in Washington, the gleam was mostly in the skies and on the faces of victorious Republicans taking office with the new chief executive, who had solidly defeated his opponent, the Democratic governor of New York, Alfred E. Smith. On the dubious premise that Jazz Age prosperity would continue forever, Hoover had successfully mobilized the support of tycoons and moguls.

The facts of life for ordinary people belied any national euphoria, however. Throughout the 1920s, a greater and greater share of income went to an ever smaller number of extremely wealthy citizens... . But while businesses prospered as never before, workers received salaries less and less proportionate to what they produced for the rich. From 1923 to 1929, for example, productivity per person-hour grew by 32 percent while workers' pay increased by only 8 percent. To make matters worse, the Revenue Act of 1926 decreased by almost 70 percent the taxes of those making a million dollars or more. Corporate profits rose 65 percent in the same period, with the result that the rich became opulently so, and the poor came perilously close to penury: each of the top .1 percent of American families took in salaries equal to that of the entire bottom 42 percent.

The causes of the incongruity are, in retrospect, easy to identify. After the treaties ending the war in 1919, a kind of myopic, jingoistic individualism gripped the country during the Roaring Twenties. International and social concerns were not much emphasized by politicians or pundits, while new wealth, new fun, new fashions and a new impudence seemed to many the most desirable goals. Modern manufacturing techniques produced enormous quantities of goods, and an unprecedented array of new radios, automobiles and household appliances appeared in stores everywhere.

But demand had to keep pace with supply, and fresh, powerful and sometimes intimidating strategies for marketing and promotion were devised by the newly authoritative advertising industry. "The key to economic prosperity is the organized creation of dissatisfaction." Such was the shameless assertion of a General Motors executive in 1929 as he summed up the spirit of the decade. With alarming rapidity, ordinary people had been persuaded that they actually needed more and more possessions, greater and greater luxuries. That the exhortations were effective was because of another contrivance: credit, which is only a euphemism for debt. "Buy now, pay later" was the last push against the backs of those who had already been convinced by advertising that (a) all their needs could be met; (b) all their needs could be met by material goods; and (c) all their needs could be met by material goods immediately. "Why wait? Be the first one in your neighborhood to own..."

But even as the General Motors officer sniffed and perhaps lit a dollar cigar, his employees were accumulating so much debt that they could no longer continue to buy every attractive new item that appeared in the shop windows and in the mail-order catalogs; much less could they contemplate a new automobile.

By late winter 1929, the average gross pay for a white-collar worker in New York City was ...not much more than it had been a decade earlier.... Credit was stretched to the limit, and comparatively few people had notable savings. A day of disaster was imminent for the nation -- beginning with the fat, sleek corporations that counted on purchases [by] ordinary men and women. While Hoover concluded his inaugural speech to wild applause that March, company stocks everywhere were gradually but continually declining.
--------------------------- {end excerpt.
Jacqueline Bouvier Kennedy Onassis: A Life,
by Donald Spoto. Copyright 2000. St.
Martin's Press.}

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