Henry Ford and his Model T, available in any color “so long as it’s black.”
6
DESPITE THE CORRUPTION OF MANY OF THE MEN WITH WHOM Harding had surrounded himself, Calvin Coolidge’s typically succinct 1924 campaign slogan, “Coolidge or Chaos,” still appeared to reflect the political reality. All through the 1920s the Democratic Party, torn apart by bitter internal divisions, seemed out of touch and unelectable, competing against a party that spoke for middle America’s hopes and aspirations. The Republican Party were seen to be making America prosper—and against that argument, the Democrats had no response.
Warren Harding (President from 1920-23), Calvin Coolidge (1923-28) and Herbert Hoover (1929-32) were all elected by vast majorities. All three believed in small, non-interventionist government; all three believed that the interests of big business were synonymous with the national interest—and therefore that business ought to be given what Coolidge called a “free hand.” It was the age, wrote Malcolm Cowley, “when directors’ meetings were more important than Cabinet meetings and when the national destiny was being decided by middle-aged bankers and corporation executives.”
“What we need in America is less government in business and more business in government,” declared Harding when appointing as his Treasury Secretary the austere banker and industrialist Andrew Mellon, the third-richest man in the United States after John D. Rockefeller and Henry Ford. Mellon, heir to those nineteenth-century capitalists who believed that the rich were uniquely suited to arrange the affairs of the rest of mankind, resigned from fifty-one directorships to take up his government post. He served at the Treasury until Franklin D. Roosevelt took office in 1932, pursuing two objectives: to reduce public debt and to lower taxes. In both of these he was successful.
Immediately after the Great War, an economic downturn brought with it industrial action and striking workers, but business, supported by the government, stood firm. Supreme Court decisions in the late 1910s and early 1920s upheld the rights of industry over the rights of child workers and women, declaring it unconstitutional for the Government to regulate labor conditions, and illegal for unionization or picketing to be mandatory. Trade unions were systematically undermined. In 1920 the president of Bethlehem Steel (an industry which had gone on strike across the nation the previous year) announced that he would not recognize a union even if 95 percent of his workers belonged to one. He was backed up by Harry Daugherty, the Attorney-General, who said that he would do all he could “to prevent the labor unions of the country from destroying the Open Shop.”
Replacing unions, altruistic companies—it was thought—would look after their workers, providing them with health insurance, baseball teams and glee clubs. Successful businesses would share their profits with workers in the form of high wages. The worker could then encourage industry by spending and, if he were clever, could even buy his own share in it by investing in the stock market.
Each successive administration continued to develop this idea of “welfare capitalism.” Easy-going Harding simply wanted to see everyone prosper; Coolidge believed that government functioned best as a “businessman’s government”; Hoover, a former head of the Department of Commerce, campaigned on the message that the United States would thrive if business thrived. “Wealth creation,” the pursuit of money for its own sake, was lauded as natural, even noble. Coolidge said, “Brains are wealth and wealth is the chief aim of man.”
Businessmen were seen (and saw themselves) as creative, daring and public-spirited. Even Al Capone tried to promote an image of himself as an entrepreneurial benefactor rather than a hood. The American businessman had replaced “the statesman, the priest, the philosopher, as the creator of standards of ethics and behavior.” By 1928, one-time progressives like the journalist Walter Lippmann had been converted to the new dogma. Businessmen, Lippmann declared, are “for once more novel, more daring, and in general more revolutionary than the theories of the revolutionaries.”
Many flourished under this regime, but some groups were thrown into unrelieved poverty. Farmers, who had enjoyed 16 percent of the national income during the war years, by 1929 found themselves with a share of less than 9 percent. New methods of transporting, processing and storing food meant that wheat and corn prices dropped. Modern women in thrall to silk stockings and nylon no longer wanted to wear cotton and wool. Instead of raising profits, the increasing mechanization of farming created worldwide markets—and worldwide competition. The value of farmland dropped by nearly a quarter over the twenties, while the value of town land doubled; bankruptcies and suicide rates among farmers rose. Feeling excluded from the country’s new urban and industrial wealth, rural Americans bitterly resented the Republican single-interest Government. “Farmers have never been rich,” said Coolidge flatly. “I don’t believe one can do much about it.”
Apart from in farming areas, from 1921 onwards the economy—and the parallel exaltation of business over the interests of workers—rose steadily. By the mid-1920s Robert and Helen Lynd recorded that in Middletown, which they described as “an aggressive industrial city” dominated by glass, metal and automobile factories, public opinion no longer sided with organized labor, and trade unions had all but disappeared.
Perhaps because industry was expanding rapidly, the workplace had become increasingly impersonal. Bosses took less time to get to know their workers individually and manual workers especially derived scant satisfaction from their labors. President Coolidge saw factory work differently. “Those who build a factory build a temple of worship,” he intoned. “Those who work in a factory, worship there.”
This glorification of “business methods” and the pursuit of “success” became almost a religion. Government and society reflected back at each other their rapacious zeal for making money. Clubs like the Rotarians, founded in 1905, and the Kiwanis, founded in 1915, promoted this aggressively optimistic idea of collective achievement, encouraging men to “sell themselves,” to be “boosters not knockers,” as a patriotic and spiritual duty. Women founded their own clubs with mottoes like “Progress,” as often devoted to the improvement of their towns as their own social lives. In 1929 there were 1,800 Kiwanis clubs nationwide; 150,000 men worldwide were Rotarians by 1930. Even God was commandeered into promoting the new gospel. Jesus was said to have been “the first Rotarian.” Henry Ford called machinery “the new Messiah.”
Adman Bruce Barton’s self-help book, The Man Nobody Knows, depicted Jesus as the “founder of modern business” and became the best-selling title in the United States in 1925 and 1926. Barton, a minister’s son, made Jerusalem sound like Sinclair Lewis’s Zenith and Jesus a latter-day George Babbitt. Not only was Jesus a “go-getter” and “the most popular dinner guest in Jerusalem” (no doubt because of his ability to turn water into wine) but he was also a great executive who had “picked twelve men from the bottom ranks of business and forged them into an organization that conquered the world.”
Selling in particular was seen as a distinctively American trait, a unifying characteristic in a country still searching for a sense of its destiny in the wider world. The journalist Mark Sullivan called “the passion to sell . . . the impelling power in American life.” An apocryphal story of the times told of a company said to give an annual banquet for its salesmen. Every year, the best performer would sit down to a lavish feast; the second-best achiever would be served the same dinner, but without oysters; and so on down the line to the least effective man, who dined on beans and crackers.
Salesmen were the “angels and evangels” of Coolidge prosperity, persuading people not simply to buy what they needed—but what they hadn’t yet dreamed they wanted. “Consumption is a new necessity,” wrote the Lynds of mid-1920s Middletown. Shoppers, whose disposable incomes rose by nearly a third in this period, found they had extra money to spend on fashionable factory-made clothes, cigarettes and lighters, make-up and wrist-watches. Even children were given pocket money.
Everywhere there were what the Lynds described as “new urgent occasions for spending money.” No one owned a radio in 1920; a decade later, 40 percent of all households had one. President Harding installed the first radio in the White House in February 1922. Over four million sets, at a cost of about $100 each, were sold between 1922 and 1925.
Installment-buying and new methods of providing credit removed the stigma from debt and allowed people to spend well beyond their incomes. By the second half of the 1920s, an estimated 15 percent of all retail sales were on credit. Half of household appliances and three-quarters of cars were sold on hire purchase in 1929. Accessible mortgages fueled a housing boom.
As well as more money, Americans had more leisure time. It was becoming more common to have Saturday afternoon as well as Sunday off, and many workers began to enjoy an annual two-week paid vacation. More and more people were working in offices in towns, rather than in factories or on farms, and their hours were determined by electricity rather than daylight. Between 1902 and 1929 the electric light and power industry expanded nineteen times.
The gap between people’s basic physical needs—food, shelter, clothing—and what they did to make a living grew ever wider. After a packaged breakfast cereal a typical American drove into town from his suburban home to begin work at a desk at eight-thirty rather than outside at sunrise. Families or groups of friends could now spend their electric-lit evenings playing mah-jongg (the craze of 1922), dancing to music on the radio or the gramophone, or going to the movies—all of which created a sense of belonging to a single American culture.
Following fads like mah-jongg, using new slang words or knowing the latest dance song “are absolutely necessary if one wishes to be like everyone else,” explained a college newspaper. Changes in fashion were making it harder to tell the social classes apart. Increasingly, the rich liked to look casual and approachable while the aspiring poor were spending as much as they could afford on clothing to demonstrate their social mobility.
This was a culture of extravagant consumerism as well as conformity: mass production, mass consumption, mass culture. A French professor, visiting the United States in Alexis de Tocqueville’s footsteps in 1927, observed that, “In its pursuit of wealth and power, America has abandoned the ideal of liberty to follow that of prosperity.”
In The Theory of the Leisure Class (1899), the sociologist Thorstein Veblen had explored human acquisitive and emulative instincts, arguing that expenditure and leisure are the ways men gain and display status. Conspicuous consumption (a phrase Veblen coined) was the wasteful use of resources or money to impress others; conspicuous leisure (another Veblen phrase) the wasteful use of time to demonstrate wealth. According to Veblen’s ideas, aspiration and acquisition were unavoidable elements of the human make-up, and they were actively encouraged by the structure and ethos of 1920s society. “Everyone lives on a slope from any point of which desirable things belonging to people all the way to the top are in view,” observed the Lynds of Middletown.
Advertisers, studying the work of academics like Veblen, began educating the poorer classes to imitate the buying patterns of the richer, appealing to Americans’ newly discovered desires to be glamorous and envied. One Middletown girl stopped going to school altogether because her parents couldn’t afford what she thought were the right clothes—without which she claimed she would have been neglected by the boys and scorned by the other girls. It was typical of the period that her parents apparently accepted her argument and allowed her to drop out.
Stanley Resor, president of the New York advertising agency J. Walter Thompson, was much influenced by the work of the psychologist John Watson in analyzing buying patterns. In blindfold tests Watson showed that smokers could not tell cigarette brands apart—so that although they bought one brand and had brand loyalty, other factors than the taste of the tobacco (despite what they may have thought) were influencing their choice. Advertisers soon learned how to capitalize on these other factors.
Creating and playing on consumer insecurities, advertisers told potential buyers that one key to maintaining beauty, youth, energy and attractiveness was health and personal hygiene. The actress Constance Talmadge, promoting cigarettes, declared, “There’s real health in Lucky Strike . . . For years this has been no secret to those men who keep fit and trim. They know that Luckies steady their nerves and do not harm their physical condition. They know that Lucky Strike is the favorite cigarette of many prominent athletes, who must keep in good shape.” Advertisers’ success in manipulating the gullible buying public became an article of faith. An essay of 1922 on the subject opened with the words, “Do I understand you to say that you do not believe in advertising? Indeed! Soon you will be telling me that you do not believe in God.”
In the early 1920s Listerine, variously used in the nineteenth century as a surgical antiseptic, a cure for venereal disease and a floor-cleaner, was transformed by advertising into a magical product which would free its user from the dreadful, life-ruining scourge of halitosis—a faux-medical condition invented by the marketing men. Their advertisements showed a downcast girl holding her friend’s bridal bouquet above the caption, “Often a bridesmaid, but never a bride.” The cause of her loneliness was “chronic halitosis”—which, happily, Listerine (rebranded as a mouthwash) promised to cure. Listerine’s profits soared from $115,000 to $8 million in just seven years.
Advertisers promoted an obsession with cleanliness and good hygiene because it would sell their products; as the historian Stephen Fox puts it, it also “projected a WASP [white Anglo-Saxon Protestant] vision of a tasteless, colorless, odorless, sweat-less world” that chimed with the rampant nativism of American politics. The unspoken message was that immigrants could become better Americans by swilling away their garlic breath with Listerine or covering up their spicy body odor with deodorant. The growth of national advertising (and the prosperity that fueled it) fostered a very specific sense of Americanness and patriotism—wholesome, moral, aspirational and conformist—a sliced-white-bread and apple-pie view of the world. Those who did not fit into this mold, or could not afford to, were branded as outcasts.
Many industries boomed in the 1920s, but one stands tall above the rest: the automotive business. “Why on earth do you need to study what’s changing this country?” asked one of the Lynds’ interviewees in Middletown. “I can tell you what’s happening in just four letters: A-U-T-O!” In 1920 there were 7.5 million cars in the United States; a decade later that number had soared more than three times to 27 million, or one car for every five people. In mid-1920s Middletown, owning a car had become by 1924 “an accepted essential of normal living,” just as owning a telephone had been at the turn of the century. Half of Middletown’s working-class families owned cars, almost all paid for by installment—although, of that group, a third did not yet have a bathtub.
Cars and the network of roads and suburbs that sprang up in their wake transformed America physically and psychologically. Distances shrank. For the first time people could travel more than five miles to work or school; trips of a hundred miles or more suddenly became a regular occurrence. In 1920 each car would travel 55,000 miles in its lifetime; by 1930 that number had jumped to 200,000 miles. Three million miles of government-coordinated asphalted highways crisscrossed America by 1927, including a transcontinental road that allowed motorists to drive directly across the country from coast to coast. Filling stations, perhaps the archetypal image of twentieth-century America, were built by the sides of these new roads in their thousands; traffic lights and parking regulations were gradually introduced in towns.
Traditional patterns of living were also transformed by the introduction of the car. Rural communities were no longer isolated islands surrounded by empty prairies. Children who did not live in towns could go to school, and thus had the chance to create lives different from their parents’. Work patterns changed. Teenagers borrowed their parents’ cars to meet their friends on their own; families went for a drive instead of going to church on Sunday. Social commentators attributed the breakdown of family values and piety as much to the negative influence of cars as to the movies.
Auto-related industries like rubber, oil, steel, petroleum and glass—and the cities they were based in—boomed. Detroit expanded by 126 percent between 1910 and 1920; Akron, Ohio, the tire capital, grew 173 percent in the same period; the wealth and population of oil-producing cities like Houston and Los Angeles ballooned.
With fuel prices reaching record highs in the early 1920s, oil companies aggressively pursued potential new fields in the Middle East, especially in Iraq and Iran, between them dividing regions into the provinces of individual companies and exploiting them ruthlessly. The Government’s noninterventionist policies allowed them to integrate vertically, controlling every aspect of oil production and distribution from refineries to petrol stations.
By 1930 the car industry accounted for a tenth of America’s manufacturing wages and more than a tenth of all its manufactured goods. An English visitor to the States wrote, “As I caught my first glimpse of Detroit, I felt as I imagine a seventeenth century traveler must have felt when he approached Versailles.” The age of steam had been vanquished by the age of petrol.
The self-made pioneers of the motor trade—the Dodge brothers, Billy Durant, John Jakob Raskob, the Fisher brothers, and Walter Chrysler—were hailed as modern-day buccaneers and their work was called “our greatest industry”: “Business has become the last great heroism . . . a conflict of the hard-muscled and strongwilled, for only they will survive.”
One man in particular was credited with developing this uniquely American industry: that irascible, eccentric genius, Henry Ford. Ford had invented the self-starting car in 1912, perfected the assembly-line production method at his Highland Park plant near Detroit two years later, and by 1924 controlled over half the motor industry. Vanity Fair hailed him as a member of their annual Hall of Fame the following year: “Because he has changed the whole rural life of America by lowering the price of motors cars; because he has made some of the most ludicrous statements ever conceived by a public man; and finally because the benevolent paternalism prevailing in his factories is enormously applauded and admired by everyone except his employees.”
Henry Ford’s revolutionary idea was to provide farmers with a cheap, practical car that would replace their horse. The first Model Ts—fondly known as Flivvers or Tin Lizzies—were sold in 1909 for about $850 (by the mid-1920s falling to less than $300), as compared to several thousand for other, more sophisticated marks. His main problem was keeping up with demand. In the year that his assembly-line system was installed at Highland Park, which allowed his workers to put together a car every ninety-three minutes, he produced more cars than every other manufacturer combined. By the time the Ford plant produced its ten-millionth vehicle, nine out of every ten cars on the road worldwide were Fords.
What was later called mass production was the key to Ford’s success. “The way to make automobiles is to make one automobile like another automobile, to make them all alike . . . just as one pin is like another pin, when it comes from the pin factory,” he said. Making individual parts—and thus whole cars—exactly identical and interchangeable was as important for repairing existing cars as for manufacturing new ones.
Despite (or perhaps because of) the fact that the machine he had made available to millions of Americans was changing society irretrievably—hastening the march of the urbanization and new codes of morality he deplored—Ford was incurably romantic about the simple pastoral America into which he had been born. He held on tightly to the populist values of a late nineteenth-century Midwestern farmer throughout his life.
At his birthplace of Dearborn, Ford constructed a replica nineteenth-century farming community, supported a back-to-the-soil movement, collected Americana and encouraged old-fashioned folk dancing. He himself was an enthusiastic and energetic dancer. In 1918, Ford bought his local newspaper, the Dearborn Independent, which he intended to use as the mouthpiece for his homespun philosophy. “Mr. Ford’s Own Page”—which he did not write—discussed homilies like “Opportunity will not overlook you because you wear overalls.”
But there was a darker side to Ford’s nostalgia for a lost rural heartland. For two years, between 1920 and 1922, the Dearborn Independent took on an overtly anti-Semitic tone. The “International Jew” was described as “the world’s foremost problem” and blamed for the high rents, low morals, short skirts, gambling and drunkenness that Ford believed were destroying America. His outspoken views earned him an interesting fan: Adolf Hitler was said to have had Ford’s picture on the wall by his desk in Munich in 1922 and copies of his books scattered around his office. The flow of anti-Semitic articles stopped as suddenly as they had started, probably because Ford was thinking of running for president and realized that a hate campaign would not serve his interests. Lawsuits had been threatened.
It was typical of Ford’s contrariness that although he openly expressed his anti-Semitic views, he also had a number of Jewish friends. In 1927 Ford shut down the Dearborn Independent altogether, running a long apology for everything he had written against Jews in past issues; this did not stop him accepting the Grand Cross of the German Eagle from the German consul in 1938 on his seventy-fifth birthday.
With his distrust of foreigners, bigoted views and pride in his limited education, Ford represented the successful side of political fundamentalism. “Facts mess up my mind,” he said; one might add that abstract thought seems to have done the same. Despite his hypocritical contempt for “big business,” he was a single-minded businessman with the morals of a robber baron, who spared scant consideration for the workers who made him rich. To him, they were simply cogs in the machine. His factory was an altar to capitalism, “a vast, satanic cathedral of private enterprise.”
There were some ways in which Ford was a good boss. One book he had read was Ralph Waldo Emerson’s essays, which inspired him with a strong sense of social justice. As long as they could do the job required of them, he was happy to hire black workers, women, the disabled, immigrants (including Jews) and ex-convicts. A sociological department at Highland Park urged Ford’s workers to be clean, healthy and family minded, rather than spending all their money in speakeasies; foreigners were encouraged to learn English. Ford also paid his workers generously—a previously unheard-of $5 a day for factory work—because, he said, he wanted them to be able to afford the cars they were making. Ford’s paternalistic philosophy epitomized the idea of “welfare capitalism” that 1920s politicians hoped would arise out of a business-dominated society.
But Ford expected an awful lot for his $5: he was known for raising “the pain threshold of capitalism.” Obsessively high standards of workmanship, as well as of behavior, were insisted upon. Philanthropic innovations were intended less to please his workers than to make them more efficient. From Ford’s point of view, the most important advantage of the high wages he offered was that however much he demanded from his workers, there would always be others waiting to replace them if they could not keep up.
By the early 1920s Ford was motor manufacturing’s Colossus. The Tin Lizzie had proved so dominant that between 1917 and 1923 Ford hadn’t even needed to advertise her merits. As the industry liked to say, “If you could deliver automobiles you could sell them.” Production was the only issue. Slowly, though, other motor manufacturers were beginning to think of ways to weaken Ford’s ascendancy, grasping in a way that he did not that cars needed to be sold, not merely distributed.
In 1924 the single-color, single-model Model T was knocked off her pedestal. General Motors had started to offer rainbow colored cars in a variety of styles, including enclosed bodies and self-starting motors—realizing that the next challenge to the automotive industry was not how to get people to buy a car (most of those who could afford it already had one) but how to get them to buy another, and then another.
As the market became more competitive, cars became more sophisticated and the range of people they were targeted towards broadened. Improved engine technology and fuel made driving smoother, quieter and easier. Crank shafts were replaced by electric starter motors. New developments in lacquers that dried in twenty-four hours rather than up to thirty days allowed customers to buy a car in Liberty Blue, Versailles Violet or Apache Red rather than black.
At first Ford refused to accept that the common man didn’t want to remain the “common” man—that he aspired to something greater and more elusive than cheap and efficient uniformity. His market troubles were compounded by conflict with his son, Edsel, who had been president of Ford Motors since 1918, over the direction the business should take. Finally convinced by arguments that he needed to adapt to this strange new desire for choice, Ford shut down his plant and modernized it, sacking all his workers. Since his was the only factory in town it was almost impossible for them to find new jobs without leaving their homes. When he was ready, Ford hired them back—at the same rate they had received before they were fired, $5 a day, and without any compensation for the $50 million they had collectively lost in missed wages.
Although it was the conglomerate General Motors who had ousted Ford from his position as market leader, the most interesting car manufacturer of the 1920s was Walter Chrysler. He had started out as a railway engineer before joining Buick (part of General Motors) as works manager in 1912, where he was described by one of his team as the “greatest production man in the industry,” and quickly rose to become company president. While Ford was developing his assembly line, Chrysler was innovating in other directions. The introduction of electric lights and starter motors made him think for the first time that the new breed of emancipated women might be potential car buyers.
Chrysler left Buick in January 1920. At his farewell dinner he was lavished with the highest possible praise, lauded as “a real American and one who understands Americanism and keeps things in the main current of American life.” He took over Maxwell Motors which began selling the first Chrysler cars in 1924 and became the Chrysler Corporation the following year.
While Ford was (both to its advantage and its detriment) a one-man band, and while General Motors, an amalgamation of various smaller companies like Buick, depended on its organizational capacity, the Chrysler Corporation’s success was founded on Walter Chrysler’s extraordinary management skills. Chrysler himself personified “traditional American qualities of initiative, courage, leadership and resourcefulness.” He believed “in the dignity of work.” Not only was he unfailingly energetic and driven, but he was “absolutely fair to his people, square with his customers, and faithful to his stockholders.” Most importantly of all, he created an atmosphere in which his workers were encouraged to be inventive, dynamic and responsive.
His engineering team, in particular, flourished under Chrysler’s guidance. The first Chrysler car they created was a tribute to his high standards and commitment to the consumer’s needs. It was stylish, luxurious, quiet, smooth-driving and easy to handle—but although reasonably priced it was still in the midrange bracket as too few could be produced each year.
Chrysler was determined to capture the low-price market dominated by General Motors and Ford, while giving the customer a high-quality car. “The person who prefers to drive a small car is entitled to every consideration that can be given him,” he said, “comfort, roominess, easy riding and long life.” To this end he brought out the affordable Plymouth in 1928. Hoping for it to appeal to women as well as men, Chrysler invited the aviator Amelia Earhart to launch it in Madison Square Garden.
The name Plymouth was chosen to evoke the “endurance and strength, the rugged honesty, the enterprise, the determination of achievement and the freedom from old limitations of that Pilgrim band who were the first American colonists.” To underline the message, Chrysler salesmen were sent Pilgrim costumes in which to promote the new car.
As manufacturers like Chrysler realized, advertising and marketing were crucial elements of retailing success. Entranced customers were sold freedom, speed, glamour and romance along with their motors. Perhaps the most famous car advertisement of the 1920s was for the Jordan Motor Company. It showed a girl in an open Jordan racing a cowboy through wilderness, her scarf flying out behind her. “Somewhere west of Laramie,” read the tagline, “there’s a bronco-busting, steer-roping girl who knows what I’m talking about. She can tell what a sassy pony, that’s a cross between greased lightning and the place where it hits, can do with eleven hundred pounds of steel and action when he’s going high, wide and handsome. The truth is—the Jordan Playboy was built for her.”
Celebrity endorsements also attracted valuable consumer attention. Cadillac was famous for the bullet-proof limousine it built for Al Capone. Movie stars commissioned custom-built cars in striking colors and finishes. Pola Negri liked to be driven around Hollywood in her white velvet-upholstered white Rolls-Royce, complete with white-liveried driver—except when it rained, when he wore black.
In January 1928, Walter Chrysler made a public declaration explicitly linking car-owning and road-building to prosperity and progress—to the march of civilization itself. “My associates and I have looked ahead and we failed to see any reason for change [in current levels of growth]. We could find no economic justification for cycles of depression. All the indicators we could see were that times were good and would continue good.” It looked as though the pro-business attitudes of the U.S. Government, and indeed of the country as a whole, had triumphantly succeeded in creating an economy that could not fail.
But even in the years of what felt like unbridled prosperity, cracks were beginning to show. Partly because cars made possible the development of the suburbs, reached by newly built roads, property was another booming industry, funded by new methods of financing. Florida, made newly habitable by air-conditioning and refrigeration, was its epicenter; vacationers and investors rushed to purchase property there. Developers began converting Florida’s salt-water swamps into a web of streets and houses. Addison Mizner, creator of Boca Raton, built ever more extravagant houses in a style that came to be known as “Bastard-Spanish-Moorish-Romanesque-Gothic-Renaissance-Big-Bull- Market-and-Damn-the-Expense.” There were 30,000 people living in Miami in 1920. Five years later that number had soared to 75,000—of whom it was said that a third were estate agents.
Stories of the money that could be made abounded. One man had bought a building lot near Miami for $25 in 1896 (when Miami had only had sixty inhabitants) and sold it in 1925 for $150,000; another cursed himself as he watched land he had sold for $12 an acre being successively sold on for $17, then $30, then $60. An evangelizing estate agent lectured prospective buyers on the property market’s three cardinal sins: fear, caution and delay. “If Jesus Christ were alive today,” he declared, “he’d buy a lot right here!”
The frenzied speculation came to a halt in September 1926 when a violent hurricane laid waste to the state of Florida. Four hundred people were killed; 40,000 were left homeless; tankers were beached on Miami’s streets. The man who had watched his property value rise from $12 to $60 an acre found that the entire string of payments was in default and he couldn’t even lay hands on his original sale price—he was forced to take the land back himself in lieu of payment.
Somehow America’s faith in its inexorable good fortune remained undampened. “The Florida boom was the first indication of the mood of the twenties and the conviction that God intended the American middle class to be rich,” wrote the economist John Kenneth Galbraith thirty years later. “But that this mood survived the Florida collapse is still more remarkable.”
In 1926 Andrew Mellon’s Revenue Act passed into law, lowering taxes for everyone—but especially the rich. Before the new laws, a man with an income of a million dollars had paid $600,000 in tax; afterwards he paid just $200,000. Three quarters of one percent of the population paid 94 percent of the Government’s tax revenue—but then again, the top 5 percent of the population earned a third of the nation’s income.
Mellon could argue that with the passage of his tax package he had accomplished his aims. Government spending had been reduced by nearly a half, government debt was down by $6 billion, taxes were minimal and the economy was booming. By the time Mellon’s new tax system came into effect in 1927 a few people were starting to worry about the effects of over-speculation and the over-extension of credit, but neither Mellon nor Coolidge would countenance an interest-rate rise; they believed the market should be self-regulating. This would have grave implications in the coming years.
Perhaps more serious still was the general acceptance of a two-tier society in which, despite America’s escalating wealth, discrepancies in income were growing ever wider. America’s vast new national wealth was deceptive. Its burgeoning prosperity was distributed unevenly and depended either on high levels of business investment or astronomical luxury spending or both. In 1929, 71 percent of American families lived on annual incomes of less than $2,500, which was the generally accepted minimum standard for decent living; of these, 42 percent survived on less than $1,500. Immigrants in particular were the victims of this gross economic inequality.