How Did The Economic Conditions Of The Unites States Of America In The Nineteen Twenties Enable Underworld Figures Such As Al Capone To Prosper?

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author above states, the large and growing segregation of

wealth between the rich and the middle-income citizens made the U.S.

economy unstable. For an economy to function properly, total demand must

equal total supply. In an economy with such unequal distribution of income it

is not ensured that demand will always equal supply. Essentially what

happened in the 1920's was that there was an oversupply of goods. It was

not that the surplus products of industrialised society were not wanted, but

rather that those of the lower class could not afford more, whereas the

wealthy spent only a small portion of their income.


“On Monday October 21, 1929 prices on the Stock Exchange started

to fall quickly. Investors became fearful. Knowing that prices were falling,

but not by how much, they started selling quickly, which then caused the

collapse to happen even faster. Prices stabilised a little on Tuesday and

Wednesday, but then on Black Thursday, October 24, everything fell apart

again. By this time most major investors had lost confidence in the market.

Once enough investors had acknowledged the boom was over, it was over.

Partial recovery was achieved on Friday and Saturday when a group of

leading bankers stepped in, in an attempt to stop the crash. But then on

Monday the 28th prices started dropping again. By the end of the day the

market had fallen by 13%. On the next day, Black Tuesday, an

unprecedented 16.4 million shares changed hands. Stocks fell so much that

at many times during the day no buyers were available at any price.” (2)


This speculation and the resulting stock market crashes acted as a

trigger to the already unstable U.S. economy. Due to the misdistribution of

wealth, the economy of the 1920's was one very much dependant upon

confidence. The market crashes undermined this confidence. The rich

stopped spen...