Who Was Roaring In The Great Depression Analysis

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To many, the Roaring Twenties seemed to be a time of extreme social and economic success, however, a plethora of factors were in-fact straining the economy. In Who Was Roaring in the Twenties—Origins of the Great Depression, Robert McElvaine analyzes these economic factors. He starts by providing background on his argument: how America’s shift in foreign policy post-WWI would require economic changes. Simply, the U.S. began to dominate the world market, but didn’t want the “responsibilities that came with world leadership” (125). Initially, McElvaine examines the growing strains on American farmers, which threatened the national economy. Additionally, the changing climate in industry and business led to a maldistribution of wealth, which exacerbated …show more content…
In 1929, only 200 companies controlled about 50% of American industry and accounted for 49% of the nation’s corporate wealth (128). To McElvaine, the U.S. market had lost “its inherent tendency towards equilibrium” (129). A huge part of this was the growing misdistribution of wealth. By 1929, for example, the top 0.1% of American families had an aggregate income to that of the bottom 42%. 71% of all American families made less than $2,500, while those at the top made upwards up to one-hundred thousand to 1 million dollars (129). McElvaine even reports that the income for the richest “was increasing more rapidly than that of any other group” (129). This huge discrepancy can be accredited to a plethora of factors, including skyrocketing productivity, at a faster rate than wages. This meant that increased profits went back to businesses, not workers. Governmental policies only enabled this trend as labor unions were weakened and tax-cuts benefited the wealthy (130). Finally, with so much money, the wealthy often resorted to luxury spending and investments in businesses, which increased productivity more and made this misdistribution problem worse (131). Ultimately, this growing divide between the classes wasn’t sustainable, which McElvaine explains …show more content…
Before the late 20s, farmers made up a bulk of the economy, and slowly became marginalized by international economics and big-businesses. At the same time, these businesses grew substantially because of investments, and began gaining the majority of corporate wealth. As companies and industries became reliant on investments, new economic ideas and tools like credit, speculation, and the stock market utilized both the poor and rich to keep the prosperity afloat. As confidence in the market kept increasing, so did credit and margin rates. Finally, in October, 1929, consumer and investor confidence fell as millions of stocks were sold within days. While a plethora of factors—both internally and externally—led to this crash, the key was the misdistribution of wealth, according to McElvaine. It set up many of the economic problems in society, including over-speculation by the rich and over-credit/margin usage by the poor. And because the U.S. was the “leader of the world economy,” this set off the worldwide depression (138). Thus, it’s clear that not everyone was roaring during the

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