For as long as humans have been on Earth, people have been judged and characterized by the multitude of their wealth. Whether it be the Roman Empire where the majority of people were poor slaves and servants who often abandon their children that they can not afford and the minority of rich who live away from the overpopulated smelly city or the African natives who were defenseless and stolen from their homeland for centuries to be used as slaves, the poor have been treated as such while the rich continue to flourish. Even as time progressed and more economic opportunities opened up with the arrival of new inventions and technology, this problem continues, and is traceable throughout the history of America. As the economy has advanced as described, situations not yet encountered may be found that have to be dealt with. There many different ideologies on how specific national economic problems should be dealt with, and can be reflected through legislation, presidential policy, and public belief during these situations. An example of such situation could be the rise of monopolies during the gilded age and the lack of legislation that caused a plethora of bad working conditions such as hazardous environments, low wages, and long hours. During this time period the major public belief among the working class was to fix these problems, and they argued for this through labor unions. Another example would be the stock market crash and the great depression in the early 20th century, which was troublesome and complicated. After many presidential attempts were made to end it, it eventually was slightly soothed with president Roosevelt's New Deal that helped somewhat, but more specifically World War 2 and the war time economy. America is economically growing, but the prosperity is not distributed equally among citizens, a trend that can be traced throughout history and analyzed in time periods with specifically high income gaps such as the gilded age, the 1920s, and the 1980s due to presidential policies, cultural beliefs, and ( )
The Gilded Age was named according to the state of America during this time period. It seemed great on the outside and encouraged the immigration of many foreigners, but was filled with slums and poverty on the inside. A time shining with inequality. This poverty was the outcome of an explosion of new technology and innovation. Some technologies created small unskilled jobs in factories while others replaced a man's work with a machines. Between 1860 and 1900 a total of around 440,000 patents were issued, a statistic that proves the massive boom in enginuity that occured in the Gilded age both in the industrial area and agricultural economy. (The Great Republic: A History of the American People, ) The inventions of steam tractors along with mechanical harvesters, combines and reapers transformed a time and worker requiring job into a short machines job, with an operator. This in effect was one of many causes of unemployment in the era. The economy was not any better in the industrial side of the country. With the creation of many manufacturing companies led to the need for lots of unskilled workers, many of whom were assigned jobs that only required them to build a small piece of a bigger product hundreds of times a day. Between 1869 and 1900, the nation's workforce increased from 13 million to 19 million workers, most of which involving low wages, long working hours, and hazardous working environments. (The Great Republic: A History of the American People ) This increase also came with an increase in the manufacturing sector in the economy, which rose from $3 billion to $13 billion. The increase in factories and massive work forces helped spark the increase in creation of cities. By 1900 over 40% of America's population lived in a city. (The Great Republic: A History of the American People) The thousands of workers employed in large needed places to live, but very little wages limited the available options for housing. Poor workers turned to tenement housings and poverty ridden slums where hundreds of fellow workers crowded into small cramped rooms as their homes. Tenements were mostly occupied by residents of similar backgrounds. With the increase in available jobs came the increase of immigration by foreigners struck by famine or poverty at home, such as the irish potato famine, or others with hope in America and economic possibility. In 1860 half of the total population of city dwellers were immigrants, with an increase in 3.7 to 5 million immigrants in the late 1800s. (The Gilded Age: Perspectives on the Origins of Modern America) Immigrants tended to live in separate communities that formed miniature colonies off their culture. For example Irish immigrants lived in separate districts along with fellow Irish, and the same with different ethnicities. This led to modern day places such as Chinatown. (Economy in the Gilded Age)
As industry expanded and ventured into places not yet explored, the government had a hard time catching up. With new areas of business discovered, such as steel, manufacturing leaders sought complete control over their industries with the hope of full power of those areas economies. These industry leaders were called monopolies, where industries were operated by one or very few other businesses with little to no other competition, leaving free reign to set prices however high they would be pleased. An example of this would be Rockefeller and the oil industry. An already successful Standard Oil business that needed more, Rockefeller used many unconventional methods of eliminating other competitors in the oil business, such as supposedly blowing up another competitors oil wells. Other means of taking over entire industries was through alliances and mergers, or buying other companies. The number of mergers in the United States increased from 69 to 1208 in 2 years during this Era. (The Great Republic: A History of the American People) Monopolies were not immediately outlawed due to the economic ideology during the Gilded age. With Americans believing in a Laissez Faire style of economy, or an economy with little government interference, monopolies continued to thrive with. As long as the government would not interfere with them, there was nobody that could shut down a monopoly or even compete in a monopolized industry. When government did attempt to interfere, such legislation was normally shot down by state courts as unconstitutional. This starts after McKinley's presidency, often known as the last “hands on†president towards the economy up until FDR and the New Deal. (Economy in the Gilded Age)
With wages low, working hours long, and working environments hazardous, workers wanted to fight back. During the Gilded Age a rise in Labor unions was noticed, while most ultimately failing due to government opposition as well as many employer enforced ways of shutting labor unions and strikes down such as yellow dog contracts, pinkerton detectives and scab workers. Yellow dog contracts forced employees to agree to not joining labor unions or acting in strikes, while pinkerton detectives sought out radical workers who were planning on doing such acts, and firing them/dealing with them accordingly. When strikes occurred, the population of people searching for work was so high that businesses could easily fill the strikers jobs with workers often called “scab workers.†(Economy in the Gilded Age)
While the statistics offer that this time was very economically good for America, the actual case was very different. Little government regulation of businesses allowed for wealth inequality to flourish during this time period with monopolies that shut down other companies in their respective industries and raised prices however they wanted, while they were not being regulated and workers had low wages, long working hours, hazardous environments but no other options. The underclass expanded significantly, and the income gap was huge during this time period. Workers were left to survive in dumbbell tenements where they were overcrowded and poorly ventilated allowing for disease to foster. Sewer and water facilities could not be made quick enough, leaving big cities sitting in their own waste. While America may have looked good on the outside, it surely did not on the inside. (Economy in the Gilded Age)
For some of the population, the 1920s were a time of prosperity. For others, it was a time of poverty. After the end of World War 1 America was faced with the transition from a wartime economy back to a peaceful and domestic one. During the war, not only did America have to mass produce and work to supply for its own military needs, but with much of Europe's farms/business destroyed, there was much economy in international trade. After the war, this changed as Europe's economy started back up again. The agricultural economy took a hard blow during this time period, an end to the prosperity they had. During the war farmers produced large amounts of crop with an equal amount, if not more, demand. After the war ended farmers kept this up to try and make ends meet, but were met with an overproduction and a lower demand. Wheat prices fell by half after the war. The south's main cash crop, cotton, had a 75% price drop. Farmers who had taken loans out on new equipment realized they could not pay for it anymore. Farm and rural bank/other building foreclosures skyrocketed during this time. To make things even worse, 90% of farmers were still without power as well. It hit the already economically divided industrial economy as well. The war caused an immediate short and sharp recession, with unemployment reaching 11%. (Historical Statistics of the United States: Millennial Edition) Labor unions, which rose in popularity during the war, had to fight to keep their small power after. With the communist revolution in 1919, Americans feared communist ideals, which many radical labor union leaders held. (Economy in the 1920s)
This time period exhibited another significant time of wealth inequality where the income gap was high, but getting a little better. The Treasury Secretary, Andrew Mellon, lowered tax rate for the wealthiest of Americans from 73% to 25%. The rich got richer while the lower class suffered. There was a rise in the quality of the middle class though, with mass production of new inventions and other goods allowing for many Americans to afford what we call everyday necessities such as refrigerators and washers. But, along with new inventions came the opportunity of investment, by the rich. The Dow Jones peaked in 1929, 6 times its average. Stock was only owned by 1% of americans allowing for very profitable returns. The stock market was an economic boom for the rich, before it actually boomed. (Economy in the 1920s)
The Great Depression came with an end to the prosperous stock market, and made things for the lower classes harder than they already were. With 13 million Americans out of jobs, the country was in distress. (Economy in the 1920s) Industrial production, which was on a high note, fell by half. The agricultural economy continued to suffer as it already was, and the depression just made it worse.
Similar to how the agricultural economy fell after the World War, America's economy in general fell to having too much supply with a clear lack of demand. As President Franklin D. Roosevelt said in his first inaugural address, "our distress comes from no failure of substance. We are stricken by no plague of locusts. […] Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of supply." Most Americans lost nearly everything they owned. People with money in the bank lost it with the closings of banks due to no resources left. Their wealth evaporated. Americans lost their money, jobs, and eventually their hope. As President Calvin Coolidge said, “In other periods of depression, it has always been possible to see some things which were solid and upon which you could base hope, but as I look about, I now see nothing to give ground to hope—nothing of man."
Wealth inequality thrived during this period, with poor Americans losing everything they owned along with the middle class citizens. America's ideological belief in Laissez Faire economics and lowering taxes on the rich came out to hurt the country in the long run, and allowed the depression to continue to hurt ordinary Americans without providing any suitable solution to the situation. President Franklin D. Roosevelt was elected with hopes of bringing this hard time to an end. President Roosevelt formulated a plan called the “New Deal†to attempt at getting America out of a Laissez Faire style economy by having more government control and regulation of it, and also address the distribution of wealth within America. “FDR’s agenda involved greater wealth redistribution, higher taxes on the affluent, fairer labor conditions, and other reforms to to improve the lives of ordinary people.†(Exceptional America: What Divides Americans from the World and from Each Other) To do this, the government had to assert more control and regulation over the economy, the exact opposite of what Americans had previously wished of their government. This took place in many different ways, such as trust busting and taking down monopolies, to giving labor unions a bigger voice and listening to what they needed. He also improved the working environment, wages, and hours through different federal programs such as the FDA, after discovering how disgusting meat packaging plants could be in a book called “The Jungle.†“FDR wanted the federal government to play a more active role in fighting the economic crisis and bettering the lives of ordinary.†(Exceptional America: What Divides Americans from the World and from Each Other) Another government problem that occured before the depression that came back to bite America was the lowering of taxes on the rich, which both increased the income gap and allowed damage to be done to the economy. “Despite coming from an extremely wealthy family, FDR also substantially raised taxes on the rich†(Exceptional America: What Divides Americans from the World and from Each Other) FDR continue to try to reform the government, while also attempting to provide relief for those damaged by it. FDR passed the Second Bill of Rights which guarantees an adequate wage, a decent home, education and health care. As FDR said, “I think it is an outrage that we should permit hundreds and hundreds of thousands of people to be ill clad, to live in miserable homes, not to have enough to eat, not to be able send their children to school for the only reason that they are poor.†(Exceptional America: What Divides Americans from the World and from Each Other) New Deal was only possible by the supreme court beginning to shut down anti new deal ideas, after being threatened by FDR to change the number of justices from 9 to 15 and add loyalist to the court which encouraged the court to support the New Deal and his plan. (FDR’s New Deal)
With the end of World War 2 came a time of economic prosperity. During the war, European and the Japanese nations were heavily damaged and in some places complete rubble, and relied on American industry for products. This time of economic demand due to the mass destruction in the World War lasted until the late 1970s, when things began to fall apart. In the late 70s and early 80s, with a mix of of government spending including the Vietnam War and other pieces of President Johnson's social programs, an influx of the baby boom generation and immigration requiring opening of millions of jobs to keep up, and the end of the reconstruction of countries decimated by World War 2 mixed to create “stagflation.†The countries high inflation was met with high unemployment along with a stagnant demand. The Federal Reserve ended this inflation, and the inflation rate fell from a devastating high of 13.5% in 1980 to just 3.2% by 1983. This had many effects on the economy, such as an increase in price of real estate and unemployment greater than 10% in America. This was the beginning of the increase in the unequal distribution of wealth in the country. (Economy in The Reagan Era)
Those investing in the stock market during this saw very profitable returns. The problem with this and its relation to the unequal distribution of wealth is that only the wealthiest one-fifth of Americans owned stock at the time, and most saw their income increase by an average of 14%. Meanwhile, the poorest one-fifth of Americans saw a sharp decline of 24% in their incomes, and the middle three-fifths of Americas populations saw their income remain steady or decrease slightly. (Economy in The Reagan Era)
With the American economy in poor shape, the country was in need of a way out. President Reagan was elected off a platform that half a century of liberal policies had taken the freedom out of our free, capitalistic market and related the works of the New Deal to fascism. Americans believed him, and many began to reject his ideas of leaving a Laissez Faire economy and other New Deal policies heavy in government intervention. Reagan famously said “fascism was really the basis for the New Deal.†While his ideas may seem radical, Reagan was known as “the great communicator†and could famously sell his ideas to constituents, saying the economic and political freedom are not separable, that capitalism should be democracy, and that heavy government intervention into the economy through taxes or regulation limits economic growth and threatens freedom.Tax cuts along with deregulation foster economic growth and liberate individual initiative. Reagan voted for huge tax cuts as well as to disempower labor unions, and to “get the government off the backs of the people.†While not completely reducing the tax burdens on Americans, his policy was effective in redistributing it off the wealthy and onto the poor. “The bulk of of U.S. income growth in the 1980s has gone to the richest of the rich†(Exceptional America: What Divides Americans from the World and from Each Other) Reagan cut income taxes ,which cost the wealthy more, and raising payroll taxes, which is primarily paid by the middle and lower classes, President Reagan shifted the tax burden to the lower and middle classes, increasing the income gap. During the 1980s the taxation rate on the poorest one-fifth of Americans increased by 16% while the rate for the richest one-fifth was cut by 5.5%, with the richest 1% having a rate cut of 14.4%. (Economy in The Reagan Era)