111 - Prohibition, the Bull Market, and Black Thursday

The 1920’s was a very prosperous time for America, and for much of the world. As I mentioned last episode, during the 20’s the American economy became the largest in the world.  

Yet postwar prosperity was precarious. Much of the American boom was a speculative affair. Fueled by optimism, and fueled by borrowing.  Customers were urged to buy on credit or to borrow from the banks, and thus the banks earned large profits. The stock market was riding high. But at any sign of a credit squeeze or a loss of confidence, everything was likely to collapse. Demand would fall, goods would pile up, and prices would plummet. This was precisely what happened on “Black Thursday,” October 24, 1929, the day of the Wall Street crash.  I’ll talk about that in a minute, but first, I need to talk about one of the weirder things about the 1920’s - prohibition.  

First of all, it’s a weird word.  Prohibition.  Obviously, it refers to prohibiting something, but why did it come to be associated only with the prohibiting of making or selling alcohol?  And why did America, a freedom-loving place, decide to outlaw AT THE FEDERAL LEVEL, this one particular thing?  We’ve never had an amendment that outlawed prostitution, or drugs, or corrupt politicians, or driving at night in traffic with your high beams on, though I might support that one.
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