The Gilded Age
In many respects, the first three decades of the twentieth century were the golden age of the American economy. Despite the absence of national income statistics, it became very apparent during this period that America was the world's premier economic power. The economic performance of the nation from 1900 to 1929 clearly established that this was "the American century" as far as economic growth was concerned.
Not only did real output expand at a very respectable 3.4 percent annual rate, but the growth far outdistanced that of older economies in Europe. It has been estimated that real output rose only 1.8 percent annually in the area constituting today's European Economic Community (Common Market). 1 There is some dispute as to how the fruits of this considerable economic progress were distributed. 2 Yet there is no denying that the typical American family in 1929 owned a car, went to talking movies, listened to the radio, and owned a telephone—none of which was true in 1900. While his framework may be flawed, Walt Rostow makes a valid point in arguing the United States entered an "age of mass consumption" during this era. 3
By the standard macroeconomic indicators of today, the first three decades of the century were highly successful. The inflation rate was 2.5 percent per annum, considered high by contemporaries but extremely low by present-day standards. Moreover, most of the inflation occurred in a few years during and immediately following World War I; during peacetime, prices were about as likely to fall in any given year as to rise.
Unemployment, as measured by the official Lebergott/BLS data, averaged only 4.67 percent for the thirty years 1900 through 1929, with the