1. The Economy of the 1920s Economy - the management of the resources of a community, country, etc., esp. with a view to its productivity. Recession - a period of an economic contraction/reduction

2. Industrial Growth A recession occurred after WWI, but economic recovery was strong from 1922 to 1928 Business changed from production of military goods to consumer goods Market: radios, washing machines, refrigerators, and cars, and more!

3. More goods in market = ___?____ prices; rising incomes = consumers have more to spend/buying powerMore goods in market = ___?____ prices; rising incomes = consumers have more to spend/buying power To encourage buying, businesses offered installment plans (buying on credit) = buy now for $100 and pay later for $120  75% of Americans bought cars with installment plans Chain store & catalogues allowed people to buy outside major cities – leads to a new consumer culture Middle class women especially influenced New products: vacuum cleaners, toasters, washing machines, refrigerators

4. Trouble Brewing? Gov’t policy helped boost economy High tariffs (_?_) on imports encouraged domestic spending; taxes on rich cut to promote spending Economy is stimulated, but Americans develop ssss pppp eeee nnnn dddd iiii nnnn gggg r r r r eeee cccc kkkk llll eeee ssss ssss nnnn eeee ssss ssss½ mil. people buy new Model A Ford w/o seeing vehicle

5. $ Booming Stock Market $ Strong economy leads people to invest in stock market – shares/stocks are bought of companies; purchasing of stocks lead to rising stock values = bull market Stocks are so profitable, people buy on margin (borrow $ to buy stocks); as long as market rises everything is good Stocks are so profitable, people buy on margin (borrow $ to buy stocks); as long as market rises everything is good Investors accumulated fortunes, but economists worried that companies’ stock prices did not correlate to their value Investors ignored expert warnings about an overvalued market overvalued market

6. Farmers and Workers Wealthiest of Americans made up 5% of population 1/5 of U.S. were farmers with many in poverty Farmers produced more crops than were consumed Surplus during WW I sent to Europe – After WW I countries were too poor to buy U.S. products As a result, farmers could not payoff debts

7. Workers’ wages rose in the 1920s; companies offered benefits (vacations and pensions) to keep employees from joining unions Unemployment is high at about 5% New assembly line (Henry Ford) lowered need for labor and unskilled workers could handle work = lower pay = more $ for owner

8. Herbert Hoover & Election of 1928 Herbert Hoover & Election of 1928Hoover Republicans nominated Herbert Hoover in national convention held in Kansas City Hoover credited Republican policy for current prosperity Slogan: “a chicken in every pot and a car in every garage” Hoover said America was near “final triumph” over poverty Within one year of Hoover’s entry into White House, U.S. is plunged in an economic depression economic depressioneconomic depression