It's this tiny upper class that gets depicted in Jane Austen romance novels and Hollywood movies, and people think this was the norm. It's not.
The English have had a solid yeoman class at least since the Black Death, and a middle class of minor gentry long before that. Your average yeoman-farmer's daughters in the 13th century were as modest as they could be. This tradition has continued. Jane Austen was not upper class - she was very much middle, daughter of a country rector whose brothers went into the Navy.
It's the upper class that has always been immodest in Britain - the real scandals in Jane Austen's period were generated by the nobility and royalty.
>>>For most of history, most people lived in horrible squalid conditions. Whole families (sometimes several families) would live in a room or two <<<
Where? What planet? What country? What year?
I think you are confusing privacy and modesty. An African/South Pacific/South American girl whose culture and local weather conditions dictate that she should walk around bare-breasted can be just as chaste and modest as a girl who is being brought up in a Spanish convent or an Apostolic church. The African girl is not flaunting herself for sexual purposes and is not about to leap into bed with anyone she's not married to. And the African man next to her is so used to seeing it as a basic part of his culture that he doesn't consider it a big thrill or even a sexual signal.
When we are speaking about modesty in the context of American co-eds, we're talking about gross sexual self-advertisement, a lack of self-control, and promiscuous sexual behavior, not how many family members are forced to sleep in the same room.
In large parts of the world (maybe a majority of the world) most people still live this way today. Exposed breasts are common. Modesty was only an option for very few in the upper class.
%%%%%
You are mixing apples and oranges. The western world has made the breast a predominat sexual tease. You also make the 19th century of the working class into "most of history" Most of history included largely agrarian communities, not Dickensian or NYC tenement hovels.
Years ago, I stayed on a Pacific Island where the traditional dress did not include covering a female body above the hips, except for a decorative necklace.
I learned that I had scandalized the locals by baring my legs - wearing a bathing suit to go diving. In their culture it was the area of the female body between the hip bones and the lower legs that was the forbidden to be seen except by a husband area.
In this island culture families slept in small 'rooms' but at a certain age boy and girl siblings no longer both slept with the rest of the family, but one or the other sex went to live with cousins or other relatives, to prevent the natural consequences of puberty temptation, etc.
BTW, I owned a 66 Le Mans convertible when it was new.