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363 Between the Wars The “Roaring Twenties” of the 1920s and the “Great Depression” of the 1930s aptly describe the two decades following World War I. That these twenty years changed American society completely is an understatement . The Eighteenth and Nineteenth Amendments to the Constitution, which, respectively, instituted prohibition and granted the vote to women, were two grand experiments to improve American society. In its trail Prohibition brought widespread smuggling, a new cottage industry to meet the increased demand for alcohol, a disregard for the law, and a guarantee of profits to organized crime. Universal suffrage had far more benign effects, although it was females that stereotyped the “flapper” era of the Roaring Twenties. It was the excitement of the age, women dressing and dancing more provocatively and drinking more openly, combined with the use of the now-very-popular automobile, that many claimed not only ruined the nation’s moral character but also irretrievably damaged the image of the fair sex. World War I brought, as war usually does, wealth to those businesses that received war contracts. After the end of the war industrialists began to devote their accumulated profits to their businesses by improving efficiency and increasing production. Electricity was introduced to more homes, and it became more widely used in businesses as well. The automobile developed into a necessity rather than a plaything. The benefits of this increased economic activity did not work its way down very far. The national labor force was employed as much as it was only because of severe restrictions on immigration. The railroads were returned to their owners in March 1920, and they were in sorry condition. In 1920, while operating revenues reached a new high, operating expenses climbed even faster and nearly eliminated net income. In 1921 freight traffic dropped by one-quarter and passenger travel by one-fifth. Revenues dropped by only 10 percent thanks to a CHAPTER FIVE The Roaring Twenties, the Depression, and World War II, 1920–1945 Chapter Five 364 1920 rate increase, while expenses were cut by 20 percent. After 1921 freight business began a recovery that by 1925 brought the rails back to wartime levels of traffic, and this stayed relatively unchanged for the remainder of the decade. Passenger traffic seesawed throughout the 1920s, but began to decline in the last half of the decade. The depression that began in 1929 was worse than anything before it in memory. A few lone voices had warned of excesses in the stock market, but new stock issues, rising prices, and increased loans from brokers characterized the market right up to the hour on “Black Thursday ,” 24 October, when prices began their precipitous drop. During the days that followed nearly everything economic and financial worked in tandem to make things worse. The plunge in the stock market made borrowing more difficult, and as investments disappeared, bank and insurance companies began to fail. Worldwide overproduction halved commodity prices and then halved them again. Production began to decline. Money disappeared into mattresses as still more banks failed. During the Great Depression of the 1930s freight tonnage sagged to levels below those before World War I. From 1929 to 1932 railroad freight ton-miles dropped by nearly a half; freight revenues dropped by as much and passenger revenues by a bit more. This was followed by a slight improvement in the next few years, but again revenues dropped sharply in 1938. At the end of 1929 twenty-nine railroad companies were in receivership. Most were small roads, and none of them were in Michigan. By the end of 1932 the number had increased to fifty-five, and now included the Wabash and the Ann Arbor. When 1937 began ninety roads, with 71,000 miles of line, were in receivership. In Michigan, the list now included the Chicago & North Western; the Chicago, Milwaukee, St. Paul & Pacific; and the Copper Range. In 1937 the Duluth, South Shore & Atlantic joined the list, and was followed a year later by the Soo Line. Surprisingly, the Pere Marquette managed to evade receivership, but only because it was supported by the Chesapeake & Ohio, which controlled it. By 1939 the railroads were hauling only two-thirds of the nation’s freight, the smallest percentage since the railroads first appeared. As the Depression grew more severe, railroad revenues declined, and net income dropped faster. There were net losses in 1932 and 1938. For the year 1939 revenues were more than one-third lower...

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