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[photo] The Great Gatsby film directed by Baz Luhrmann, starring Leonardo di Caprio, Carey Mulligan and Joel Edgerton
Economic Illusions of the Roaring Twenties
If in the 1920s the Americans believed they had discovered a high road to everlasting wealth, they had a rude awakening. We think of these years as the ‘roaring ‘twenties’, the years of the Great Gatsby and Cole Porter, early Hollywood and the triumph of the American automobile.
But this glitzy American prosperity was never more than skin deep. It never reached more than a tiny minority of Americans, and certainly did not seep down to the 60% and more who remained below the official poverty line.
Nine out of ten Americans saw their disposable income fall in the course of the 1920s. Meanwhile the number of Americans earning a million a year went up an astonishing 2343% between 1921 and 1929.
Economists squabble over the details. But the American experience of a century ago proves beyond any doubt that making the rich richer and impoverishing everyone else is a short-term route to temporary wealth for a tiny few, and very quickly leads to ruinous financial crash.
The Great Gatsby by F. Scott Fitzgerald, published in 1925, is set in fictional areas of Long Island, these notes were cribbed
Fitzgerald, who, like his characters, rose quickly to fame and wealth, noticed a hollowness to this period of exuberance. Although the lifestyles of the rich and famous were appealing to him, he couldn’t help but feel burdened by the moral emptiness and hypocrisy beneath the surface of all the glamor. The Great Gatsby represents Fitzgerald’s attempts to confront such conflicting feelings about this unique time in United States history.
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[photo] Wall Street in panic as stocks crash, 24-29 October 1929
Beggaring Europe and the Wall Street Crash
The grim American insistence on being paid back every cent for the loans they had made in the First World War starved the world’s economies of the means to reconstruct and to weather the normal, short-term economic ups and downs. Entirely predictably, the Americans also discovered that beggaring Europe had an impact on their own economy too.
Nearly a century on, just what fundamentally caused the Wall Street Crash of October 1929 remains [rather surprisingly it seems to us] a mystery. From time to time economists have another go at explaining it, but there is still no agreement.
But we do know that the Germans had their own mini stock market crisis 1927-8 and then their own financial crash in March 1929. The British in turn suffered a financial crisis in September 1929. One of the most recent and sophisticated attempts to explain the Wall Street Crash, written by the Jean-Laurent Cadorel of the Paris School of Economics, points to this British crisis as the tipping point that finally sent Wall Street down.
[photo] Outside London Stock Exchange after Wall Street Crash
September 1929 British Stock Exchange crash: By September 20, the London Stock Exchange had crashed after noted British investor Clarence Hatry and several of his colleagues were jailed for fraud and forgery. The crash sent shockwaves across the pond and severely dented American investor confidence.
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‘I am sure that the American people have no desire to attempt to extract any ounce beyond the capacity to pay' - President Hoover
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