Why the Roaring Twenties Left Many Americans Poorer

In August 1929, Ladies Home Journal published an article titled “Everybody Ought to Be Rich.” In it, businessman John J. Raskob told Americans that if they invested $15 in the stock market every month, in 20 years they could have $80,000 (over $1 million today). Raskob insisted that “almost anyone who is employed can do that if he tries.”

For wealthy, white Americans like Raskob, the “Roaring ‘20s” was a time of immense economic prosperity. Yet for most Americans, it wasn’t. Robert Chiles, a history professor at the University of Maryland points out that the average salary for most workers in 1929 was about $20 a month. So if most Americans had followed Raskob’s advice, they would have been placing three-quarters of their earnings into the stock market. “It’s sort of absurd,” says Chiles.

In fact, income inequality increased so much during the 1920s, that by 1928, the top one percent of families received 23.9 percent of all pretax income. About 60 percent of families made less than $2,000 a year, the income level the Bureau of Labor Statistics classified as the minimum livable income for a family of five.

As W.E.B. Du Bois observed in a 1926 essay: “We have today in the United States, cheek by jowl, Prosperity and Depression.”

The speakeasy party culture popularized in books, movies and magazines was only accessible to a small portion of wealthy, urban and mostly white Americans. Black Americans and immigrants faced violence from the newly revived Ku Klux Klan, and many workers’ wages either didn’t keep up with productivity or fell off completely. For farmers in particular, the Great Depression basically began after World War I.

During that war, U.S. farmers had increased food production to feed European allies. Afterward, prices and demand dropped, and farmers were stuck with an oversupply they couldn’t sell.

“Coming out of the war when exports fall, [farmers] get into this very unfortunate feedback loop,” says David Sicilia, a history professor at the University of Maryland. “Prices are falling and in order to continue to survive, farmers basically respond by planting even more. So there’s overproduction layered on top of overproduction, and so they get into this kind of vicious cycle.”