Great Depression
The Great Depression was the worst economic decline ever in U.S. history.

It began in late 1929 and lasted about a decade. Throughout the 1920ís, many
factors played a role in bringing about the depression; the main causes were the
unequal distribution of wealth and extensive stock market speculation. Money was
distributed unequally between the rich and the middle-class, between industry
and agriculture within the United States, and between the U.S. and Europe. This
disproportion of wealth created an unstable economy. Before the Great

Depression, the "roaring twenties" was an era during which the United

States prospered tremendously. The nation\'s total income rose from $74.3 billion
in 1923 to $89 billion in 1929. However, the rewards of the "Coolidge

Prosperity" of the 1920\'s were not shared evenly among all Americans. In

1929, the top 0.1 percentage of Americans had a combined income equal to the
bottom 42%. That same top 0.1 percentage of Americans in 1929 controlled 34% of
all savings, while 80% of Americans had no savings at all. Automotive industry
tycoon Henry Ford provides an example of the unequal distribution of wealth
between the rich and the middle-class. Henry Ford reported a personal income of
$14 million in the same year that the average personal income was $750. This
poor distribution of income between the rich and the middle class grew
throughout the 1920\'s. While the disposable income per capita rose 9% from 1920
to 1929, those with income within the top 1-percentage enjoyed an extraordinary

75% increase in per capita disposable income. These market crashes, combined
with the poor distribution of wealth, caused the American economy to overturn.

Increased manufacturing output throughout this period created this large and
growing gap between the rich and the working class. From 1923-1929, the average
output per worker increased 32% in manufacturing. During that same period of
time average wages for manufacturing jobs increased only 8%. Thus, wages
increased at a rate one fourth as fast as productivity increased. As production
costs fell quickly, wages rose slowly, and prices remained constant, the bulk
benefit of the increased productivity went into corporate profits. In fact, from

1923-1929, corporate profits rose 62% and dividends rose 65%. The federal
government also contributed to the growing gap between the rich and
middle-class. Calvin Coolidge\'s administration (and the conservative-controlled
government) favored business, and consequently those that invested in these
businesses. An example of legislation to this purpose is the Revenue Act of

1926, signed by President Coolidge on February 26, 1926, which reduced federal
income and inheritance taxes dramatically. Andrew Mellon, Coolidge\'s Secretary
of the Treasury, was the main force behind these and other tax cuts throughout
the 1920\'s. Even the Supreme Court played a role in expanding the gap between
the social/economic classes. In the 1923 case Adkins v. Children\'s Hospital, the

Supreme Court ruled minimum-wage legislation unconstitutional. The large and
growing disproportion of wealth between the well to do and the middle-income
citizens made the U.S. economy unstable. For an economy to function properly,
total demand must equal total supply. In an economy with such different
distribution of income, it is not assured that demand will equal supply.

Essentially, what happened in the 1920\'s was that there was an oversupply of
goods. It was not that the surplus products of industrialized society were not
wanted, but rather that those whose needs were not satisfied could not afford
more, whereas the wealthy were contented by spending only a small portion of
their income. Three quarters of the U.S. population would spend essentially all
of their yearly incomes to purchase consumer goods such as food, clothes,
radios, and cars. These were the poor and middle class: families with incomes
around, or usually less than, $2,500 a year. The bottom three quarters of the
population had a collective income of less than 45% of the combined national
income; the top 25% of the population took in more than 55% of the national
income. Through this period, the U.S. relied upon two things in order for the
economy to remain even: luxury spending, investment and credit sales. One
solution to the problem of the vast majority of the population not having enough
money to satisfy all their needs was to let those who wanted goods buy products
on credit. The concept of buying now and paying later caught on quickly. By the
end of the 1920ís, 60% of cars and 80% of radios were bought on installment
credit. Between 1925 and 1929 the total amount of outstanding installment credit
more than doubled from $1.38 billion to around $3 billion. Installment credit
allowed one to "telescope the future into