When I was young, mental hospitals sprinkled the countryside. My parents read Freud in hypochondriac mode and neuroses were part of growing up – indeed, nurtured in certain groups (say among drama majors & yes, creative writers). I don’t know what percentage of the population was housed on those wards, but considerably more than today.
Update: Jonathan Kellerman, a man who went through med school as these changes were taking place, describes the arguments for de-institutionalization by doctors & ideologues such as R. D. Laing and Thomas Szasz. That in this case even those of us on this blog, non-experts, could see the problem indicates how extreme are the problems in contemporary treatment. As Kellerman notes
That is not to say that anyone who pens violence-laden poetry or lets slip the occasional hostile remark should be protectively incarcerated. But when the level of threat rises to college freshmen and faculty prophesying accurately, perhaps we should err on the side of public safety rather than protect individual liberty at all costs.