The Boom Economy of the 1920s

1
The Boom Economy of the 1920s

• An Exploration

2
Big Business

• Harding, Coolidge and Hoover all believed in
  laissez faire policies
• Many progressive reforms overturned
• Mergers on the rise
• Period of great expansion

3
Unions

• Union membership on decline throughout 1920s
• Effects of Red Scare
• Government and courts sided with business
• Economic prosperity eases demand for unions

4
The Automobile

• 1920s begins the Automobile Age
• Production goes up, prices go down
• Car ownership expands
• Stimulates economy

5
Automobile Age

• The car helped the economy in several ways
• Demand for inputs
• Wages for labor
• Highway and road construction

6
Henry Ford

• Business pioneer
• Fordism
• Mass production
• Any color as long as its black!
• Mass consumption
• Higher wages
• Americanization

7
Other Sectors Also Strong

• Construction
• Electrical Goods
• Modern conveniences
• Appliances
• Durable Goods
• Entertainment

8
(No Transcript)
9
(No Transcript)
10
American Cities Grow

• 1920 Census Over 50 of Americans live in cities
• Detroit and Los Angeles arrive

11
But Farmers Have Problems

• Prices that had risen as a result of WWI begin to
  fall
• Many farmers had borrowed to buy land that is now
  worth much less
• Attempts at farm subsidies were rejected by
  Coolidge

12
Were 1920s Prosperous for All?

• Income inequality grew
• 1920 Top 1 earn 12
• 1929 Top 1 earn 19
• But standard of living rose for all
• Electricity
• Sanitation
• Health care

13
Stock Market

• A decade of impressive growth
• Bull market
• By some measures, value more than triples
• Buying on margin
• Put 40-50 down, borrow the rest
• Boom not based on fundamentals
• Most believe it was irrational exuberance
• Similar to Tech Bubble in 2000

14
What Goes Up