1920–1921 postwar recession

The 1920–1921 postwar recession was a sharp economic reversal that brought Harry S. Truman and Eddie Jacobson’s haberdashery from a flourishing business to failure. Falling farm prices weakened the market around Kansas City, customers stopped buying as they had before, and the partners borrowed to keep their stock current. The store closed in 1922 with about $35,000 in debt; Truman’s decision to keep paying creditors rather than escape the obligations through bankruptcy made the downturn’s effects last long after the recession itself.

From Postwar Confidence to Falling Prices

In 1920, the country appeared to be turning toward normalcy. As Warren G. Harding campaigned for the presidency on that promise, Truman and Jacobson were restocking their shelves and serving customers in Kansas City. But the apparent return to ordinary business concealed a growing strain in the farm economy. At the Kansas City grain exchange, where John Truman had lost money two decades earlier, wheat prices were falling rapidly: a bushel that had brought a record $2.15 in 1919 sold for $1.44 by the fall of 1920. Farm prices overall fell 40 percent, and the trouble spread across the Middle West.

The downturn became visible in the goods the partners could no longer sell. By 1921, the silk shirt associated with the postwar boom had become an unaffordable or unwanted luxury for their customers. By the middle of the year, the store’s earlier prosperity had evaporated, and the country was in a full-scale depression. Truman and Jacobson borrowed more money to keep their inventory up to date, trying to preserve a business whose customers had less to spend.

A Store Turned Into a Place of Mutual Aid

The recession altered the shop’s daily role as well as its sales. Old friends continued to come in, but fewer came to buy; several instead borrowed five or ten dollars. The store became, in effect, a gathering place, an informal unemployment agency, and a small loan office, with Truman’s generosity helping make it so. Jacobson recalled that customers asking for Captain Harry were usually seeking a loan, while those asking for Captain Truman were there to make a purchase. The distinction captured how sharply the business had changed: personal loyalty remained, but it could no longer be counted on as commercial demand.

With less business to occupy him, Truman grew restless and went out to lunches and meetings with people while Jacobson stayed behind to mind the shop. Their friend Ted Marks remembered that they talked about almost anything except Truman’s troubles. Marks had not encouraged Truman to enter retail, but he also described the wider circumstances as difficult: rents were high, starting over was hard, and people around them were struggling. The recession thus appears not simply as a decline in sales but as a narrowing of choices for a small business already facing high costs and customers short of money.

Failure, Debt, and Competing Explanations

In 1922, Truman & Jacobson failed. The partners discussed their options and decided not to file for bankruptcy, which would have wiped out their debts. Instead, they would try to pay their creditors gradually. Jacobson went on the road selling shirts and did what he could toward the obligations, but after three years he could no longer keep up and declared bankruptcy. Truman continued paying on the haberdashery for fifteen years after it closed; the resulting financial pressure would leave him strapped for money for two decades.

The evidence does not present the failure as a matter of uncontested blame. Many regarded Truman as a victim of circumstances, and Edgar Hinde recalled that the times had been against him. Wheat had fallen further, to 88 cents a bushel in 1922. But Gaylon Babcock, whose father had invested in the store, remembered the collapse as no surprise and characterized it as another instance of Truman’s misfortune. Truman himself blamed Republicans in Washington, particularly Treasury Secretary Andrew Mellon’s tight-money policy. The account also points to an earlier policy change: the Wilson administration had abruptly reduced government spending and raised taxes in 1920. These explanations sit alongside the immediate evidence of falling prices and vanishing sales, rather than resolving the question of responsibility.

A Recession With a Long Personal Afterlife

The closing of the store did not end Truman and Jacobson’s friendship. Some time afterward, when they met for lunch downtown, Truman saw that Jacobson’s suit was frayed, gave him money, and told him to buy new clothes. The gesture echoed the shop’s earlier transformation into a place where friends could seek help, but now it took place after the business itself was gone. Truman’s continued debt payments also made the failure more than a brief setback: the obligation shaped his finances for years and made his decision to honor the creditors consequential well beyond 1922.

The recession’s significance in Truman’s story lies in this contrast between public economic promises of normalcy and the private arithmetic of a failing shop: wheat at 88 cents, shelves maintained with borrowed money, customers asking for small loans, and $35,000 owed when the partners closed. The episode shows the downturn through the particular vulnerabilities of a small retailer and the long consequences of his choice to repay what he owed, rather than through national statistics alone.