Panic, Prosperity, and Progress: Five Centuries of History and the Markets

CHAPTER 11

The Roaring Twenties

The popular view of the 1920s in America was that it was a decade of excess, wealth, and decadence. While this was true in some cases, in a nation growing as rapidly as the United States—its population had doubled between 1890 and 1920—the truth was far more complex and nuanced.

The twenties were indeed “roaring” for the richest in the country, and for most of the population it was a time of growing wages, greater buying power, and technological marvels. In retrospect, it was also a time that set the stage for the most calamitous economic downturn in the nation’s history.

■ The Great War’s End

What we now call World War I—at the time, the Great War—ended in late 1918, having claimed the lives of 10 million men and expending nearly a third of a trillion dollars.

The war was, of course, devastating to Europe, but one of the unintended beneficiaries was the American farmer, who enjoyed selling his ever-growing basket of goods for continuously rising prices. The agricultural industry in Europe was devastated from the years of fighting, and America, safely on the other side of an ocean, was able to provide the world’s food at price that had been pushed higher by the reduced supplies.

Once the war was over, however, the golden age of American farming came to a quick close. Cotton dropped from 35 cents a pound to 16 cents; corn plummeted from $1.50 a bushel to a mere one-third that price; many other foodstuffs and staples suffered similar plunges of 50 ...