By the end of the decade and the onset of the Depression those percentages had changed to where five percent of the people had 35 percent of the disposable income. During that same period of time, the top one percent of the people increased their percentage of disposable income from 12 to 20 percent. At the same time they moved to the position of holding 36 percent of the wealth. At the other end of the spectrum more than 60 percent of the people lived below the poverty line (Kirkendall, 1974, p. 5-6).
In retrospect, the Coolidge-Hoover "New Era" prosperity was largely illusionary and a "last convulsion of the industrial revolution" (Manchester, 1973, p. 32). After World War I, the techniques of mass production had combined to increase the efficiency of the man-hour by more than 40 percent. This was an enormous increase in the output of goods, an increase that was unmatched by a corresponding rise in purchasing power. "In the golden year of 1929, Brookings economists calculated that to supply the barest necessities a family would need an income of $2000 a yea----more than 60 percent of American families were earning. In short, the ability to buy did not keep abreast of the volume of goods being turned out" (p. 32).
By the autumn of 1929, the financial pages of America were gloomy reports of 'heaviness' in automobiles and radios, slackening of the building trades, disappointment along the new frontiers of aviation. Much of America's productive effort and income had lately gone into luxuries and durable goods, whose purchases could be postponed without affecting daily needs" (Wechter, 1948, p. 9). When these goods would begin to pile up in warehouses, production would necessarily slow, and the unemployment rate would increase drastically.
Another factor combined with overproduction as a prime cause of the Great Depression--the over expansion of credit. In an era of mass overproduction, the goods had to be sold somehow...
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