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“Black Tuesday” After 70 Years

by Robert S. McElvaine on Oct 27, 1999

Robert S. McElvaine

Seventy years ago this October 29, a giant exclamation point was placed after the words “The End” on a popular, long-running American comedy named “The Roaring Twenties: The New Era of Eternal Prosperity.” In his inaugural address less than twenty months before, Herbert Hoover had proclaimed that the final victory over poverty was within sight. His eyes had failed him. 

But Hoover’s dim eyes were far from unique. In “The Glass Menagerie”(1945), Tennessee Williams rightly referred to the years of the Great Depression as a time when the American middle class, whose “eyes had failed them, or they had failed their eyes” in the 1920s, had “their fingers pressed forcibly down on the fiery Braille alphabet of a dissolving economy.” 

We live today in very different circumstances from those of the 1920s. The world economy is much more interconnected. Government has many more tools to counteract economic downturns. Yet some major aspects of the twenties appear very familiar to Americans of the 1990s. Could it be that we have been failing our eyes in the Roaring Nineties — refusing to see where we are going — much as our forebears did seven decades ago? 

The decade of depression whose arrival was announced in a firm voice in lower Manhattan on “Black Tuesday,” October 29, 1929, was the most important such period of the twentieth century. It was the only prolonged span in the last hundred years during which some of the most significant trends of the modern world — toward extreme individualism, materialism, immediate gratification, and self-identification based on consumption ? were reversed. Progress, marketplace economics and democracy itself were thrown into doubt. With the failure of the individualistic market economy, community-oriented values made a strong comeback. 

One of the most common misconceptions about the Great Depression is that it was caused by the stock market crash.  Although few people had noticed it, business was already in a downward slide before October 1929. The problem was that, contrary to Hoover’s reassuring words, the economy was fundamentally unsound. Prosperity had been based on the sale of new consumer goods, particularly automobiles and radios. Mass production had necessitated mass consumption, and advertising had been used to wean people from the traditional values of saving and deferring pleasure. In essence, people had been told, “You don’t need to save for a rainy day, because we are in the New Era, and the economic sun will shine forever.” 

The trouble was that mass buying required that purchasing be widely diffused among the masses, but the prosperity of the twenties was very unevenly distributed. The economic pie was growing, but the slices for the middle and lower classes — those who would have to do most of the consuming — were shrinking relative to that of the rich. Under these conditions consumption could not keep up with production. The inevitable collapse was postponed by selling products on credit to consumers who did not have the money to buy them. But by the summer of 1929 too many people’s credit had been exhausted. The economy was sinking before the stock market crash. 

Two similarities in the situations of the twenties and nineties are billowing consumer debt and soaring stock prices. Surely the most troubling parallel, though, is the concentration of income at the top. Many Americans had little about which to roar in the twenties. The same has been true in the giddy nineties. Between 1920 and 1929, disposable income for all Americans rose by 9 percent, but the richest 1 percent saw their incomes increase by 75 percent. In recent years the changes have been even more skewed towards the top. Between 1977 and 1999, the middle fifth of households had a modest increase in income of 8 percent and the lowest fifth lost 9 percent, while the top 1 percent gained 115 percent. Whatever one may think of it in terms of justice, such widening inequality is not healthy for an economy based on mass consumption. 

Growing inequality, and its potential effects on the economy, is the major issue on which the coming election should focus, but is there a candidate willing to initiate such a discussion? 

It is unlikely that anything similar to the Great Depression will occur again. But we fail our eyes as much as our ancestors in the twenties did theirs if we think we have entered a genuine New Era of Eternal Prosperity. One clear, generic lesson that history teaches us is this: “It won’t last.” 


Robert S. McElvaine, a writer for History News Service, is a professor of history at Millsaps College and the author of "The Great Depression."