I mean, by people I think you mean people with money. People dress appropriate to their station. People then doing manual labor couldn’t afford clothes like the dude in the post and wouldn’t have wasted money on clothes that weren’t durable and easily cleaned.
T-shirt and jeans became the standard due to their cheap cost to manufacture, durability, and standardized sizes and popularity in the mining, farming, and railroad industry, and again with WWII.
Not a lot of jobs these days that allow for fancy dress and not many people can afford their own tailor. Not to mention temperatures were much cooler back then allowing all those extra layers, where as now you’d melt in some parts.