December 1 & 2, 2011 TSW: Discover how the pattern of conspicuous consumption in the 1920s led America into the Great Depression EQ: Economically, what comparisons can you make between the U.S. in the late 1920s and today?

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The Postwar Economic Boom, 2.1A What do you see here? What message does the billboard send? Describe the area around the billboard. Why is the area so run down? Who do you think designed the billboard? What do you think those who live in the area think of it?

2.1A The Postwar Economic Boom Years following WWI known as “Roaring 20’s” Many Americans believed U.S. a place of unlimited growth, opportunity, and achievement. During 20’s Americans were earning more money than ever before. Between 1922 and 1929 national income rose 43%

2.1A The Postwar Economic Boom Americans had more $ to spend, especially on automobiles, but also radios, refrigerators and etc. Business profits rose by 80% By 1929 stock market was at an all time high. The number of stocks traded doubled between 1927 and 1929.

2.1A Postwar Economic Boom By late 1929 cracks were beginning to show in the U.S. economy. Unemployment was on the rise. Farmers were losing their land Stock prices were dropping. Number of Americans living in poverty was on the rise. Stock market crash launched the longest and most devastating depression in U.S. history.

2.1A Postwar Economic Boom The Crash did not cause the Depression, rather it was one of many complex factors. Historians agree on 6 key factors; 1)Republican domestic and international economic policies. 2) unchecked stock speculation. 3) weak,unregulated banking 4) overproduction of goods. 5) the decline of the farming industry. 6) unequal distribution of wealth

Republican Economic Policies What do you see here? How are the men dressed? Describe their facial expressions. What is the mood of the photo? Do you think these men are wealthy or poor? Why? These men are all conservative Republicans. Based on what you know about conservatives how do you think they dealt with business interests in the 1920’s?

2.1 B Republican Economic Policies “The business of America is business.” Calvin Coolidge Republicans implemented many pro-business policies. Andrew Mellon, secretary of Treasury, key proponent of trickle down economics, believing that economic policies that benefited big business and America’s wealthiest citizens would eventually benefit all Americans. Prosperity would “trickle down” from upper classes to the middle and lower classes. Mellon slashed taxes for big business and reduced personal income tax for wealthy people.

2.1 B Republican Economic Policies Despite Mellon’s projections wealth did not trickle down to the American worker in any significant way. Corporations devoted profits to expanding facilities, increasing production, and lining their own pockets. Owners kept workers’ wages low. Trickle-down economics simply increased the gap between rich and poor. Coolidge’s administration refused to forgive war debts from WW I. Rescheduled loan payments pushed Europe deeper in debt.

2.1 B Republican Economic Policies Republicans impose high tariffs on imported goods. Without a substantial market for their goods, European nations had no hope of repaying loans, nor could they afford to buy American goods. Until the late 1920’s many Americans were too busy investing in the stock market to care about Europe’s economic problems.

2.1 C Real Estate and Stock Speculation What do you see here? What building do you see? Who are the people on the ground? Who are the people on top of the building? What are they doing? What does this cartoon reflect about stockbrokers during this period?

Speculation 2.1 C Real Estate Speculation The practice of speculation- in which a person or organization makes a risky investment in the hope of making a quick, large profit- was widespread during the 1920’s. Early in the decade many investors speculated on real estate. The migration to California of over one million people prompted investors to buy massive tracts of land. The California real estate boom went but in the mid 1920’s when the amount of land for sale far exceeded demand for new housing.

Speculation 2.1 C In 1925 many investors turned from California to Florida. Many bought land sight unseen, which made scams and fraudulent practices inevitable. Unsuspecting buyers owned alligator infested swampland. Others held “beachfront property” that was actually six feet underwater at high tide. Eventually there were no more buyers and the boom was followed by a crash.

Stock market speculation 2.1 c Real estate speculators turned their attention to the stock market. Investors believed stock market would continue to go up indefinitely and companies’ profits would continue to increase. Speculators bought large amounts of stocks they thought would go up. Then they turned around and sold the stock at a higher price making a quick, easy profit. In this system the value of many companies' stock became artificially inflated and did not reflect companies actual worth.

Stock Market Speculation 2.1 C Rampant speculation drove stock prices higher and higher. Some analysts and investors predicted the market was headed for a fall. Even President Hoover warned investors to curb their speculation and began to sell some of his own stack.

The Crash 2.1 D What do you see here? What is the building you see? Why do you think they might be crowded around the bank? The bank is failing. How do you think the depositors trying to get their $ are feeling? What might they be saying? How do you think bank failures affected the Nation?

The Crash 2.1 D Analyst’s warnings that the bull market could not continue forever made some investors nervous. In 1929 many investors began selling their stocks while they could still get a high price. As investors began withdrawing from the market, prices started to fall. As stock prices fell, companies slowed production, which in turn led to additional price drops. By October,1929 prices were on a devastating downward spiral.

The Crash 2.1 D October 24, 1929 investors flooded the NY Stock Exchange with sell orders in an attempt to get rid of their stocks. Prices plummeted and investors started losing large amounts of $. Bankers, led by J.P. Morgan tried to stabilize the market by purchasing investors’ stocks at a higher price than the market was offering. Bankers pumped much-needed cash into market but couldn’t prevent its continued descent.

The Crash Monday, Oct.28, investors again rushed the exchange and sold their stocks at a loss of over $4 billion. October 29, “Black Tuesday”,orders to sell at any price swamped the stock market. In just hours people lost fortunes it had taken an entire decade to make. By the end of Black Tuesday investors had lost $16 billion. The Great Depression had officially begun. The stock market crash triggered a collapse of the U.S. banking industry. When banks folded their customers had no way to get $ back.

2.1 E Overproduction What are the men on the top doing? Why might the be spilling milk on the ground? How do you think they are feeling? What are the men on the bottom doing? These men are Henry Ford and his son Edsel. Why are they celebrating? What kinds of economic problems might dampen the mood at the Ford Plant? How might the economic collapse be explained by what you see in these two images?

Overproduction During the 1920’s U.S. industry enjoyed a postwar boom that lasted until the end of the decade. Postwar technological changes completely changed the way American people lived and worked. By 1929 many companies had more plants than they actually needed, and the market was saturated with goods that few Americans could afford to buy. New technology also helped farmers produce more goods than ever before. Farmers were often stuck with surplus crops they couldn’t sell or only at a low price

2.1 F Farming Farming has historically been the backbone of the American economy. By 1929 farming was in deep decline. During 20’s farmers borrowed heavily to pay for new, technologically advanced equipment. As farmers failed to sell surplus crops they became unable to repay their bank loans, including mortgages. Banks often could not auction off foreclosed farms and ended up taking a loss. Many banks collapse under pressure of farmers problems and stock market crash.

2.1 f Farmers Farmers situation only grew worse as the Depression deepened. Between 1929 and 1933 farmers income dropped by 50% Property values decreased by billions of dollars. A severe drought, known as the Dust Bowl, hit Midwestern and southwestern U.S. Over one million families lost their farms between 1930 and The unrelenting poverty of the American farmer contributed to the nation’s overall economic decline and dramatized the gap between haves and have-nots.

Unequal Distribution of Wealth 2.1 G What do you see here? How are the people in the center dressed? Where do you think the wealthy people are going? What might their home look like? How might their life be different from that of the doorman? How might extraordinary wealth on one hand and low wages on the other have contributed to the economic collapse of the late 1920’s and 1930’s?

Distribution of Wealth 2.1 G During the 1920’s most of country’s wealth remained in the hands of a few people at top of economic pyramid. As decade wore on, gap between rich and poor grew wider, and the distribution of wealth grew increasingly unequal FTC reported that 1% of American population possessed over 59% of country’s wealth. Experts also estimated that over 60% of U.S. families lived on or below the minimum subsistence level of $2,000. Per year. Like farmers, workers struggled to survive in 1920’s. Many workers were replaced by machines. Low wages made workers as impoverished as farmers.