“Big business in America,” remarked the journalist Lincoln Steffens, “is producing what the socialists held up as their goal—food, shelter, and clothing for all.” But signs of future trouble could be seen beneath the prosperity of the 1920s. The fruits of increased production were very unequally distributed. Real wages for industrial workers (wages adjusted to take account of inflation) rose by one-quarter between 1922 and 1929, but corporate profits rose at more than twice that rate. The process of economic concentration continued unabated. A handful of firms dominated numerous sectors of the economy. In 1929, 1 percent of the nation’s banks controlled half of its financial resources. Most of the small auto companies that had existed earlier in the century had fallen by the wayside. General Motors, Ford, and Chrysler now controlled four-fifths of the industry.
Figure 20.1 HOUSEHOLD APPLIANCES, 1900-1930
At the beginning of 1929, the share of national income of the wealthiest 5 percent of American families exceeded that of the bottom 60 percent. A majority of families had no savings, and an estimated 40 percent of the population remained in poverty, unable to participate in the flourishing consumer economy. Improved productivity meant that goods could be produced with fewer workers. During the 1920s, more Americans worked in the professions, retailing, finance, and education, but the number of manufacturing workers declined by 5 percent, the first such drop in the nation’s history. Parts of New England were already experiencing the chronic unemployment caused by deindustrialization. Many of the region’s textile companies failed in the face of low-wage competition from southern factories, or shifted production to take advantage of the South’s cheap labor. Most advertisers directed their messages at businessmen and the middle class. At the end of the decade, 75 percent of American households still did not own a washing machine, and 60 percent had no radio.