Most professional men for the past two years have been living on money borrowed on insurance policies, etc. The only work that comes in now are impossible collections on a contingent fee basis. Everybody is digging up old claims and trying to realize on them. Tempers are short and people are distrustful and suspicious. There is nothing to do but work harder for less money and cut expenses to the bone.17
But, mostly, the fundamental change was an atmosphere of collective sympathy, like the feeling in the wake of a shared tragedy. This atmosphere explained people’s willingness to work for a contingent fee or to buy apples on a street corner even when they were not in the mood for an apple. However, by stopping any conspicuous consumption, they inadvertently worsened the Depression.
Street begging was not limited to the United States. In Germany, where the unemployment rate was even higher than in the United States, there was a striking rise in panhandlers and in unemployed youths involved in crime in the years just before Adolf Hitler came to power. The higher crime and unemployment rates help explain Hitler’s appeal to many voters.18 After his election in 1933, Hitler dealt with the problem by imprisoning German panhandlers and homeless people in concentration camps.19
Meanwhile, much of the world had embraced the frugality narrative. Film critic Grace Kingsley noted in 1932 that motion pictures had become less interested in luxury:
Due to depression and its effect on the public producers are soft-pedaling luxury display in their pictures. Whereas heretofore the heroine appeared to live in the public library building, so vast was her domicile, now smaller rooms are shown and display of wealth is not nearly so lavish.… And now the elegant Richard Barthelmess and the exotic Marlene Dietrich are scheduled for roles in simple stories of home life.20
These movies offered scripts for living. People may find themselves not ever consciously deciding to consume less but consuming less out of pure subconscious suggestibility.
Church sermons also inveighed against the display of wealth, as reported in a newspaper article in 1932:
In this time of depression, publicly displayed extravagance is an offense, the Rev. Dr. Minot Simons, pastor, asserted yesterday in his Christmas sermon in All Souls Unitarian Church.
The article further quotes his sermon:
I hope that any one tempted to splurge in costly rejoicings will get that thought that they would be in bad taste.… Such things always stir a profound resentment, and this Winter such resentment must not be stirred. 21
Note that the argument here is basically moral, not an appeal to self-interest.
As Anne O’Hare McCormick had noted when writing about Main Street, USA, people’s attitudes toward one another had changed. They became concerned about managing others’ perceptions of them. The Washington Post observed that the conclusions one might draw about others’ status and human worth from observing their frugality had changed entirely:
And then the mode turned a handspring, as so often happens, and poverty was chic! “I cannot afford it,” was said brazenly, even boastingly—because didn’t this imply that one had lost lots of money in stocks and things. Whether one had had any or lost any, of course.22
Indeed, during the Great Depression, people took (and still sometimes take even today) a strange pleasure in telling Depression hardship and loss stories about themselves, their relatives, and their friends. The narrative has moral dimensions. Because their poverty was not their fault, there was no shame in it; and there was a dignity in sympathizing with those who suffered. In addition, the “sin” of enjoying riches amidst poverty was more immoral when one had long-unemployed neighbors who were barely getting by.
New Modesty Crazes
The “poverty chic” culture spurred new crazes in the 1930s. The bicycle craze was notable: many people began riding bicycles to work or to go shopping in urban environments. Department stores installed bicycle racks for their patrons.23
The bicycle craze arose partially from the desire to postpone buying a new car. Those who already owned a car decided to keep the car going rather longer. Those who did not own a car decided to continue taking public transportation as they always had, or to ride a bike. Why did people postpone their car purchases? Being unemployed was one key reason. Another was thinking that they might become unemployed.
A 1931 sound movie, Six Cylinder Love, based on a play produced during the depression of 1920–21, shows some of the complexities involved in a man’s decision to buy an expensive car. As a result of that decision, his wife and daughter are transformed into extravagant spenders, and the family also attracts sponging friends who believe that they are rich because they own a pricey car. The movie plot itself became part of a narrative constellation about the consequences of extravagant purchases. Seeing your neighbor unemployed, and hearing stories of desperation and struggle, made it obvious to many that you should not buy a new car this year. A 1932 article in the Wall Street Journal also noted the anti–conspicuous consumption motive for delaying a car purchase:
One serious but not easily discernible obstacle is now blocking the exercise of their spending power by those who have it and are capable of using it judiciously in the benefit of industry. This is the widespread fear of being considered ostentatiously extravagant.… It is no mere guesswork that asserts such a handicap upon efforts to revive trade. The automobile industry, for one, has proved its reality on an extended scale by gathering conclusive evidence that important numbers of people with money and the actual need of a new car are denying themselves through fear of neighborhood criticism. A new species of sales resistance is among the “psychological” products of depression, namely, the haunting doubt whether or not ownership of a new car may be, or may seem to others, an indecent display of affluence.24
The Wall Street Journal makes an excellent point. A “visibility index” of consumption categories, created by Ori Heffetz, seeks to measure how much other people notice consumption expenditures. The index ranks automobiles as the second most visible consumption category, out of thirty-one categories, second only to cigarettes.25 If you no longer want to look rich, skipping a new car might be the best thing to do.
The feedback loop soon became apparent: some people postponed buying a car or other major consumer items, which led to loss of jobs in the auto and consumer-products industries, which led to more postponement, which led to a second round of job loss, and so on for several years. The numbers tell the tale: sales of new cars by Ford Motor Company, which had adopted many labor-saving mass-production machines, fell 86% from 1929 to 1932.
Why was the feedback loop so severe, and why did it happen when it did? To answer these questions, we have to look more closely at the underlying narratives. In the home, there was trouble with the sudden increase in leisure. One anonymous woman wrote to Confidential Chat in 1932:
Dear Globe Sisters—May I come to this wonderful column with my problem? I have been married six years and have two children. We were married when quite young and unfortunately my husband had no special trade. I worked, too, but when our first baby was born I had to quit. I got him to take a course to advance himself and I paid for this, also all expenses connected with the baby and our living expenses while he was not working. He worked steadily until a year ago and then like so many others he was laid off. Since then he has had only a few days now and then. I could not work last Summer, as my second baby was only a few months old. This Winter we have spent with relations and I have been helping with the work, occasionally at sewing or nursing, but we don’t get by and I am worried.
What bothers me most is the attitude of my husband. It doesn’t seem to bother him much of any to live like this. I would hate to have it thrown at my children that they were on the town. I feel the way things are now that we are just living on charity, and this can’t go on forever.
Is this attitude on the part of my husband my fault for working in the beginning or is it his fault for being so slow to take the responsibility? Don’t think that my husband isn’t a good
man, for he is a fine fellow in many respects, but he seems to entirely lack any money-making ability. When I earn a few dollars he thinks it is all right for me to take it and pay the bills. I feel so ashamed. I can’t accustom myself to a man taking money from a woman, even if she is his wife.
Is there anything I can do to bring him to his senses? I could not let my own people know of this situation. I have the promise of a good job soon myself. If I get it I feel that I shall just pay the children’s board and let him shift for himself. Would this do any good, do you think? Please welcome me and advise me.
Lucy Ambler.26
Lucy had to be reminded, by one of the “Globe Sisters,” that her husband’s problems were not her husband’s fault:
Dear Lucy Ambler—Your letter regarding an irresponsible husband certainly aroused my interest. I am married to a man who is like your husband in many respects and I think we have a great deal for which to be thankful. You say he is a good man and a fine fellow. Is he to blame if like millions of others he finds himself with no means of support? If he always worked steadily until a year ago and did his best for his family, can anyone look down upon you if you are in need at the present time? Isn’t it a fact that your dissatisfaction is really with the present economic conditions and not with your husband? … Catarina27
We can imagine the conversations between husband and wife about the making of large expenditures—if they talk about the topic at all. The feelings of hurt, betrayal, and helplessness would be difficult to talk about, not just for Lucy Ambler and her husband, but also for other couples who feared that they might find themselves in the same situation. We can easily imagine that talk about high-priced expenditures might be verboten, along with the expenditures themselves.
When such stories are rampant, and when unemployment is increasingly long-term, any employer who offers a job to a laid-off worker will be regarded as a sort of hero. But there is an offsetting tendency for the employer to worry about hiring someone with little “money-making ability” and few other options. As a Pennsylvania emergency relief board administrator said in 1936:
Another factor of importance in connection with the unemployment situation, which, of course, is at the basis of relief, is the fact that many men and women who were merely being “carried along” by their employers in the pre-depression days, for sentimental or other reasons, will never get back their old jobs.28
Employers need to balance morale and productivity. As Truman Bewley found in his interviews of employers during a recession in the 1990s:
Managers were concerned about morale mainly because of its impact on productivity. They said that when morale is bad, workers distract one another with complaints and that good morale makes workers more willing to do extras, to stay late until a job is done, to encourage and help one another, to make suggestions for improvements, and to speak well of the company to outsiders.29
It seems safe to conclude that employers are particularly concerned about worker morale during hard times. They often try to boost their employees’ morale by helping them feel successful in their jobs and by using a nondifferentiation wage policy, paying high performers the same as low performers, despite the negative effects on incentives to work hard.30 In addition, employers often continue to employ weak employees for sentimental reasons or to maintain workplace morale.
But there is a darker side to the story. The worst days of the Depression gave employers a plausible excuse for laying off weaker employees without generating stories of their inhumanity. When times are a little better, they would rather not rehire the weak employees, which can lead to long-term unemployment for those who have been laid off.
Modesty Fashions: Blue Jeans and Jigsaw Puzzles
Blue denim fabric, formerly considered appropriate only for work clothes, started to become more fashionable during the Great Depression, though earlier celebrities had made denim fashion statements. For example, James D. Williams, governor of Indiana from 1877 to 1880, was nicknamed “Blue Jeans Bill” because of his insistence on wearing them even to formal occasions. According to one observer, for Williams the coarse blue fabric was “a symbol of equality and democracy.”31 But it was not until the 1930s that the material gained popularity. In 1934, the Levi Strauss Company created its first blue jeans for women, naming them “Lady Levi’s.”32 Then, in 1936, Levi Strauss put the first fashion logo on the back pocket of its blue jeans. Vogue magazine featured its first blue jeans–clad cover model in the 1930s, and women started deliberately damaging their new jeans to make them look worn, putting “an intentional rip here and there.”33
We can trace blue jeans’ associations with different cultures over the decades. In the 1920s and 1930s, blue jeans culture fit in with the poverty-chic culture, the cowboy story culture, and the dude ranch culture. Starting in the 1940s, blue jeans became associated with altogether different cultures, first with Rosie the Riveter during World War II, and then with high school, youthful rebellion, and women’s liberation.34 The blue jeans fashion truly exploded in the 1950s,35 propelled to new heights by the hit 1955 movie Rebel Without a Cause and its handsome star James Dean, who died at age twenty-four, a month before the movie was released, while driving his sports car recklessly. The death was perfect, if ghoulish, publicity for the movie. Some fans of the film went to extremes; for example, Douglas Goodall, a London mail truck driver, not only wore blue jeans but also by 1958 had watched the movie four hundred times and legally changed his name to James Dean.36 But by this time, the blue jeans narrative was losing its connection with sympathy for poverty, and it may have lost its status as an economic narrative. Nonetheless, the ubiquity of blue jeans (based on their cheapness, practicality, long life, and others’ fashion decisions) has allowed the blue jeans epidemic to continue spreading to this day.
Also connected to poverty chic was the jigsaw puzzle craze. To occupy themselves during a quiet, stay-at-home evening, some people bought one of the new cheap cardboard jigsaw puzzles (instead of the more expensive traditional wooden puzzles) at newsstands with the evening newspaper on their way home from work. Jigsaw puzzles were suddenly on sale everywhere, and people wondered, “What psychological quirk lies buried in the human brain to spring to radiant life at the rattle of odd pieces of material in a cardboard box?”37
Bicycles, blue jeans, and cardboard jigsaw puzzles might be nothing more than logical, rational responses to the bad economic conditions of the Depression. They were inexpensive. But the enthusiasm for these products, the craze nature of the phenomena, suggests that their narratives help to explain why people stopped buying expensive consumer goods during the Depression—which, by extension, helps to explain the length and severity of the Depression. Perhaps people would never have ridden a bicycle to work in the 1920s not because they were rich but because doing so would have seemed odd. Only after one heard the narrative describing others who rode a bike to work or stayed home assembling jigsaw puzzles in the evening would one be comfortable doing the same things. And then one might continue doing them for many years, weakening the market for more expensive forms of transportation and entertainment, and thus slowing recovery from the Depression. Likewise, if building a beautiful new house is considered to be in bad taste and stirs profound resentment, then those are pretty good reasons not to build the house, thus helping to explain why housing construction virtually stopped during the Depression.
We see here that economic dynamics—the change in demand for goods and services through time—depend on subtle changes in narratives. Over the course of the Great Depression, people started to move beyond poverty chic, perhaps because of changing narratives about what people’s apparent poverty implied about them. As the Washington Post noted in 1932:
But now another handspring has been turned. Now it is no longer chic to imply poverty. If one had lost money in unwise speculations or stocks he has had plenty of time to recover from the world-wide upheaval. If he still claims poverty—well, the implication is that perhaps after all he never
did have anything!38
What conclusions can we draw? The modest economic recovery that started at the bottom of the Great Depression in 1933 occurred, at least in part, because people were spending more because poverty was no longer so chic! All of these narratives imply that the causes and effects of the Great Depression extend beyond economists’ simple story of multiple rounds of expenditure and the effects of interest rates on rational investing behavior.
The decline in modesty and compassion narratives since the Great Depression may help to explain many economic trends. The modesty decline is likely related to the rise in inequality, in the share of national income earned by the top 1%, documented by Thomas Piketty in his 2014 book Capital in the Twenty-First Century.39 It also is likely related to the long-term decline in managers’ feeling of loyalty to their employees, documented by Louis Uchitelle in his 2006 book The Disposable American.40 A narrative downplaying modesty and compassion was supported by Donald Trump in his 2007 book, Think Big and Kick Ass in Business and Life, coauthored with Bill Zanker.41
The frugality narrative was repeated in Japan after 1990, with different stories and personalities. The high-flying Japanese economy of the 1980s had given way to the “lost decades” of the 1990s and beyond and to stories similar to the modesty and compassion stories in the United States. The Washington Post summed these narratives up in 1993:
Tokyo—The once free-spending Japanese consumers have a new model citizen: Ryokan, an 18th century hermit monk who gave up his worldly goods to seek the pure life.
Ryokan was featured recently in a prime-time television drama and a magazine cover story. A book about him and other ascetics, The Philosophy of Honest Poverty, has sold 350,000 copies since September.
Narrative Economics Page 17