Signs of the Economic Times
During the laissez-faire attitude of the Harding and Coolidge presidencies, money was put back into the economy through mass consumerism and through the building of business with money from stock purchases. People counted on the value of stock rising, so they even bought stock with credit using what is called a margin purchase. The average person could put 10 percent down on a stock and pay the full cost out of dividends, or the money that was made when the stock price rose. People put up their houses, jewelry, and cars as collateral to buy stocks on margin. Wages had risen and people relied on their paychecks to pay bills. They were also putting more money into banks with the hopes that their money would grow over time with interest.
Using money from stock sales, businesses were making more goods than demanded by consumers. When businesses like the automobile industry slowed production, it affected other feeder industries including steel, rubber, glass, and textiles.
The 1920s had not been a boom time for all. Farmers, who had gone into debt buying more land and new equipment during World War I when crop prices were high, faced financial trouble when prices dropped sharply after the war. Congress tried to relieve their financial troubles with the McNary-Haugen Bill, which included a formula to ensure parity for the farmers so that they would always make back production costs when crops sold. Since parity would require financial backing from the government in the form of a subsidy, Coolidge vetoed the bill.
Most Americans still earned under $2,000 per year. The economic climate should have been a sign that a great fall would occur during a natural dip in the business cycle.
Depiction of beggar