Inequalities of Wealth in 1920s America

This section explores the great inequalities in the wealth of the American population during the 1920’s. Despite the widespread prosperity that characterised the American economy in the 1920s, not all sectors of society benefited equally from the economic boom. While industries such as automobiles and consumer goods flourished, other sectors faced significant challenges. Two key examples of industries that struggled were agriculture and traditional industries, while certain groups within society, such as African Americans, Native Americans, and immigrants, continued to face significant economic and social inequalities.

Agriculture and the Struggles of Farmers

During World War I, American farmers had seen a rise in demand for their produce, particularly from European countries. Many farmers took out loans to expand their production capacity, purchasing machinery such as tractors that made farming more efficient. As a result, American farms prospered during the war years. However, once the war ended, the situation dramatically changed.

• Declining Demand and Surplus: The demand for American produce from Europe decreased as European economies recovered, and American farmers were left with a surplus of goods. At the same time, European governments-imposed tariffs on American products in retaliation for high American tariffs on foreign goods. This created a vicious cycle where farmers could not sell their produce at a profit, and prices dropped sharply.
• Rising Debt and Poverty: As a result of falling prices and an inability to sell crops, many farmers found themselves deep in debt. In 1924, approximately 600,000 American farmers lost their farms due to foreclosures. By 1928, it was estimated that around half of all American farmers were living in poverty. While many industries thrived, agriculture suffered as farmers were unable to sustain their businesses amidst a surplus of goods and declining demand.

Decline of Traditional Industries

Many older industries also faced economic difficulties during the 1920s, particularly industries such as coal and textiles.

• Overproduction and Underconsumption: Traditional industries like coal mining and textiles experienced problems of overproduction, where too many goods were being produced, leading to a situation where there was simply not enough demand to consume these goods. This led to a reduction in profits and many businesses had to lay off workers, leaving a significant number of people redundant. Those who managed to retain their jobs often found themselves with very low wages.
• Rise of New Industries: At the same time, new, emerging industries such as automobiles, electrical appliances, and radios were booming, overshadowing older sectors. The decline of traditional industries, especially in the industrial North, left many workers struggling in an economy that was shifting towards modern, high-tech manufacturing.

Disadvantaged Groups in Society

While the country’s economy was growing, not all Americans were able to share in this prosperity. Several disadvantaged groups faced significant inequality, discrimination, and poverty during this period.

African Americans

African Americans continued to face discrimination and economic hardship in many areas of the country during the 1920s.

• Rural South: In the South, many African Americans were still working as sharecroppers or farm workers, often under exploitative conditions. The general decline in agriculture, compounded by racism, meant that African Americans had few opportunities for advancement. They were often caught in a cycle of poverty with little chance of improving their circumstances.
• Urban North: In the North, where African Americans had migrated in the early 20th century in search of better opportunities, they often found themselves relegated to low-paying, menial jobs in cities. Racial prejudice prevented them from advancing to higher-paying positions, and they were often subjected to discrimination in housing, education, and employment.
• Widespread Poverty: An estimated 70 million out of the 110 million Americans were living below the poverty line in the 1920s, including a large proportion of African Americans. Economic opportunities remained limited for them, and their standard of living was far below the promises of prosperity being made to the wider population.

Native Americans

The situation for Native Americans was even more dire, as many had been displaced from their ancestral lands over the course of the 19th and early 20th centuries.

• Land Loss: By the 1920s, Native Americans had been dispossessed of much of their land. The rise of mining companies and the gold rush had fuelled the systematic loss of Native American lands, and many were forced onto reservations – areas of land that were often unfertile, desolate, and far from the land that had traditionally sustained their way of life.
• Extreme Poverty: Life for Native Americans was marked by extreme poverty and low life expectancy. The standard of living was incredibly low, with little access to healthcare, education, or economic opportunities. Many were living in squalid conditions, and their way of life was overshadowed by the history of displacement and the continuing economic hardships they faced.

Other Disadvantaged Groups

Several other groups in American society also faced inequality during the 1920s, despite the overall prosperity of the decade.

• Immigrants: Immigrants, particularly those from Southern and Eastern Europe, faced significant discrimination in the job market. Many were forced to take low-paying jobs in factories or on the lowest rungs of the workforce and were often victims of xenophobia. While some found success and prosperity, many others struggled to achieve a decent standard of living.
• The Elderly and Disabled: During the 1920s, there were no national system of pensions or social welfare for the elderly or disabled. Without government support, many elderly Americans and people with disabilities were forced to rely on their families or charity, living in conditions of great poverty and isolation.

The Promise vs Reality: Herbert Hoover’s Campaign

In the 1928 presidential election, Herbert Hoover’s campaign famously promised that there would be "a car in every driveway and a chicken in every pot". However, the reality for many Americans during the 1920s was far from this ideal. The gap between the wealthy and the poor continued to widen, and most people did not experience the affluence that Hoover’s slogans suggested.

While some Americans did prosper during the economic boom, millions of others were left behind, struggling with poverty, discrimination, and economic inequality. The prosperity of the 1920s was not shared equally, and the boom had its dark side, with significant sections of American society facing hardships that would become more apparent as the decade ended.

While the 1920s saw a tremendous rise in the prosperity of the United States, not all Americans shared in this newfound wealth. Farmers, traditional industries, African Americans, Native Americans, and immigrants all faced significant hardships, and millions of people lived below the poverty line. The inequalities of wealth during this period were stark and would ultimately contribute to the social and economic tensions that erupted during the Great Depression.