How Can a Poor Man Stand Such Times and Live?: For Educators

This song is useful to introduce a lesson about economic conditions in the United States during and after the First World War, and the causes of the Great Depression.

Although this song was recorded a few months after the stock market crashed in 1929 and is considered a protest song of the Great Depression era, the conditions it describes actually reflect the American economy during and immediately after the First World War. Between 1916 and 1920, inflation rose rapidly, reaching double-digit levels in October, 1916, and peaking at 23.67% in July, 1920. You might provide some simple examples to illustrate what such high levels of inflation mean in terms of the cost of individual goods and the value of one’s earnings, as well as clarifying that inflation refers to an overall increase in price level, as opposed to the prices of a few individual goods. You can then ask students to speculate on the causes of inflation in this period. Among the most significant causes to address are the shift in production from consumer goods to war materiel, and wage and price controls implemented by the government. Students will probably recognize that the decision to supply the Allied Powers prior to U.S. entry would mean that factories produced fewer consumer goods and more military goods, and thus consumer goods would be more scarce because fewer resources would be dedicated to such production. They might not immediately understand the role of wage and price controls, however, so you may need to explain the concept, both in general terms and in terms of the specific controls that existed during the war. You can point out that non-union laborers, who were typically unskilled and earned lower wages to begin with, did not benefit as much as union (skilled) laborers did from the wage controls, or as much as the farmers did from the price controls, and that when both were lifted at the end of the war, inflation rose further and faster.

You can then continue to trace the changes in economic conditions into the 1920s, leading up to the Great Depression, which provides an opportunity to return to the topic of government involvement in the economy. Explain that in the second half of 1920, actions taken by the Federal Reserve to contract the money supply led to a recession from mid-1920 until 1921 and caused rapid, significant deflation, before the price level returned to pre-war rates by April, 1923. While two additional mild recessions occurred during the decade, the American economy expanded as the Federal Reserve lowered interest rates, encouraging borrowing and investment, and productivity rose substantially. This expansion, in turn, fueled considerable stock speculation, and in the absence of proactive, meaningful federal regulation of either the stock market or the financial sector as a whole, the price of stocks soared until the market crashed in October, 1929.