CONFLICT AND RECONSTRUCTION

67

THE INDUSTRIAL BREAKDOWN OF 1920-1921

Irrespective of these decisions, however, industrial
unrest grew in intensity and in extent. The primary cause
was the skyrocketing of prices. Altho real wages rapidly
declined, employers and public officials declared that high
wages were the fundamental cause of high prices. Wage
earners in turn contended that there was no relation between
 wages and prices. In the course of wage controversies,
 the unions also disseminated data to show that
producers and distributors were exploiting consumers and
unjustly putting the stigma on labor.
Finally, the consumers rebelled. They refused to buy
longer at the high prices, and this determination, as
popularly expressed in “the buyers’ strike,” led in large
part to a nation-wide commercial and industrial collapse
in the latter part of 1920. Manufacturing plants, including
 the basic industries, suspended operations, and industrial
 workers were thrown out of employment. Orders for
commodities were cancelled. Surplus stocks were liquidated
 at ruinous prices, and widespread failures occurred
in the retail and wholesale trades. The extent of the
breakdown was further aggravated by the inability of
foreign markets to buy American products, and by the
abrupt falling of prices for farm products, accompanied
simultaneously by a collapse of agricultural values and
purchasing power.

DEFLATION OF WAGES TEMPORARILY ADOPTED

These adverse conditions produced immediately two
warring sets of views as to the policies to be pursued for
the rehabilitation of trade and industry. Manufacturing,
transportation, and business interests, considered as a
whole, claimed that there must be a drastic cutting down