The Postwar Economic Boom, 2'1A

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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?

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2.1A The Postwar Economic Boom

• Years following WWI known as Roaring 20s
• Many Americans believed U.S. a place of unlimited
  growth, opportunity, and achievement.
• During 20s Americans were earning more money
  than ever before. Between 1922 and 1929 national
  income rose 43

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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.

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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.

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2.1A Postwar Economic Boom

• Stock market crash launched the longest and most
  devastating depression in U.S. history.
• 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

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2.1A Postwar Economic Boom

• 4) overproduction of goods.
• 5) the decline of the farming industry.
• 6) unequal distribution of wealth

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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 1920s?

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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 Americas 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.

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2.1 B Republican Economic Policies

• Despite Mellons 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.
• Coolidges administration refused to forgive war
  debts from WW I.
• Rescheduled loan payments pushed Europe deeper in
  debt.

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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 1920s many Americans were too
  busy investing in the stock market to care about
  Europes economic problems.

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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?

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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 1920s.
• 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 1920s when the amount of land for sale far
  exceeded demand for new housing.

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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.

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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 companiesstock
  became artificially inflated and did not reflect
  companies actual worth.

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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.

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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?

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The Crash 2.1 D

• Analysts 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.

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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
  couldnt prevent its continued descent.

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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.

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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?

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Overproduction

• During the 1920s 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
  couldnt sell or only at a low price/

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2.1 F Farming

• Farming has historically been the backbone of the
  American economy.
• By 1929 farming was in deep decline.
• During 20s 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.

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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 1934.
• The unrelenting poverty of the American farmer
  contributed to the nations overall economic
  decline and dramatized the gap between haves and
  have-nots.

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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 1920s and 1930s?

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Distribution of Wealth 2.1 G

• During the 1920s most of countrys 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.
• 1929 FTC reported that 1 of American population
  possessed over 59 of countrys 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
  1920s. Many workers were replaced by machines.
  Low wages made workers as impoverished as farmers.