1. Tuesday, November 17 th U.S. Economics in the 1920’s

2. Today’s Learning Target I can explain the causes and effects of post-war economic expansion in the U.S. I can explain the causes and effects of post-war economic expansion in the U.S. I can evaluate post-war economic expansions impact on American society. I can evaluate post-war economic expansions impact on American society.

3. Standards USH.4.1 Understand the significance of the pro-business policies of President’s Harding, Coolidge, and Hoover and the effect these policies had on the economy of the 1920s. USH.4.2 Identify new cultural movements of the 1920s and analyze how these movements reflected and changed American society. USH.4.4 Describe technological developments during the 1920s and explain their impact on rural and urban America. 3

4. The Harding Administration They have to deal with an large debt due to WWI and Wilson’s policy. They have to deal with an large debt due to WWI and Wilson’s policy. National Debt goes from $1 billion (1914) to $25 billion (1919). National Debt goes from $1 billion (1914) to $25 billion (1919). Their Goals – reduce national debt and promote economic growth. Their Goals – reduce national debt and promote economic growth.

5. Republican Policies Cause: Charles Dawes – eliminate debt by slashing spending. Cause: Charles Dawes – eliminate debt by slashing spending. Effect: Annual budget deficit becomes a surplus. Effect: Annual budget deficit becomes a surplus. Cause: Fordney-McCumber Tariff Act (1922) – pushed tariff rates on manufactured goods to an all- time high. Cause: Fordney-McCumber Tariff Act (1922) – pushed tariff rates on manufactured goods to an all- time high. Effect: U.S. manufacturers keep prices high and increase profits. Effect: U.S. manufacturers keep prices high and increase profits. Cause: Andrew Mellon – tax cuts on wealthy. Cause: Andrew Mellon – tax cuts on wealthy. Effect: trickle down effect to the middle & lower classes in the form of jobs and higher wages. Effect: trickle down effect to the middle & lower classes in the form of jobs and higher wages.

6. As a result of these efforts… Cause: The gross national product goes from $70 billion (1922) to $100 billion (1929). Cause: The gross national product goes from $70 billion (1922) to $100 billion (1929). As a result, wage increases As a result, wage increases Effect: Rise in income leads to interest in new products. Effect: Rise in income leads to interest in new products. Increase in electricity – 1930 – 2/3 of all homes have electricity. Increase in electricity – 1930 – 2/3 of all homes have electricity.

7. The Harding Administration Recall that Harding won the Presidential election of 1920… Once elected, Harding staffed his administration with 2 sets of individuals: Highly respected Washington Insiders: Charles Evans Hughes ( former supreme court justice)  Sec. State Herbert Hoover (former Food Administrator)  Sec. Commerce Andrew Mellon (Tycoon)  Sec. Treasury His “cronies” (known as the “Ohio Gang”) 7

8. The Harding Administration Harding's “Ohio Gang” caused many scandals. Harry Daugherty (campaign manager and Boss of the OH Rep. Party)  Attorney General Accepts bribes from German Agents  forced to resign Charles Forbes (old friend)  Head of Veterans Bureau Steals $250M dollars worth of medical supplies Able B. Fall (childhood friend)  Sec. Interior Teapot Dome (Improper leasing Gov. Lands – oil reserves) Harding has a heart attack (1923)  VP Coolidge takes over

9. Harding on the Teapot Dome Scandal “I have no trouble with my enemies. I can take care of my enemies all right. It’s my friends…that keep me walking the floor at night.” “I have no trouble with my enemies. I can take care of my enemies all right. It’s my friends…that keep me walking the floor at night.” President Warren G. Harding President Warren G. Harding Cause- Scandals of the Harding Administration. Cause- Scandals of the Harding Administration. Effect- Americans faith in the presidency is weakened, doesn’t fully recover for years. Effect- Americans faith in the presidency is weakened, doesn’t fully recover for years.

10. Consumer Products of the 1920s Automobile Automobile Radio Radio Phonograph Phonograph Washing Machine Washing Machine Refrigerator Refrigerator Vacuum Cleaner Vacuum Cleaner Toaster Toaster Sewing Machine Sewing Machine Why would consumers want to buy these? How will the availability of these new products affect consumer spending? How will increased consumer spending affect businesses that make these products? How could businesses encourage consumers to continue to buy more products?

11. Automobile Positive Effects Family could run errands. Assembly line provided jobs. Negative Effects No need for delivery services. Smaller car companies out of business. Boring, repetitive jobs lead to turnover.

12. Radio, Sports, Entertainment Positive Effects Cultural experiences Negative Effects Morality/sexuality (offensive material) Black Sox Ads can buy bias

13. The White Sox Scandal: What matters more, $ or winning? In 1919, the Chicago White Sox were undisputedly the best baseball team in the world. In 1919, the Chicago White Sox were undisputedly the best baseball team in the world. They were also among the worst paid. They were also among the worst paid. This is the result. This is the result. This is the result. This is the result.

14. Appliances Positive Effect Makes housework easier. Negative Effect Hired fewer servants. Lazier

15. Vacuum Cleaner

16. Advertising

20. CREDIT! Federal gov keeps interest rates low. Federal gov keeps interest rates low. Cause: Easy-credit policy would promote business. Cause: Easy-credit policy would promote business. Results: Easy access to credit enabled consumers to buy goods when they did not actually have the money to pay for them. Results: Easy access to credit enabled consumers to buy goods when they did not actually have the money to pay for them. Credit concerned some economic experts. Credit concerned some economic experts.

21. Investment Practices Cause/Results: Stock sales increase – as demand rises, so do the stock prices. Cause/Results: Stock sales increase – as demand rises, so do the stock prices. Bull & Bear Markets? Bull & Bear Markets? Stock speculation/Playing the Market Stock speculation/Playing the Market Rapid buying/selling inflates stock prices, such that stocks were selling at a high price (far more than what they were worth) Rapid buying/selling inflates stock prices, such that stocks were selling at a high price (far more than what they were worth) Fine if demand is high, but if investor confidence weakened, prices tumble. Fine if demand is high, but if investor confidence weakened, prices tumble. Margin Buying – purchasing stocks w/borrowed money. Margin Buying – purchasing stocks w/borrowed money.

22. How are these multiple causes for economic expansion interrelated?