Download The Economy in the late 1920s

The Economy in the late 1920s
Angela Brown
Chapter 22 Section 1
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• Mood of U.S. optimistic.
• Medical advances reduced deaths
from whooping cough, diphtheria, and
other serious diseases.
• 1900 the # of infant deaths declined.
• Life expectancy up 10 years
• (59 years Men/63 women)
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Economy Appears Healthy
• Hoover self-made
millionaire – widely
admired
• Organized food
relief in Europe
during WWI.
• Sec. of Commerce
under HardingCoolidge
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“Wonderful Prosperity”
• 1925 market value of
all stocks $27 billion
• 1928 alone stock
values rose $11.4 billion
• weathervane of
nation’s economy
• Oct. 1929, stock values
hit $87 billion
• Value of worker’s
wages risen 40%
• Unemployment below http://cache.daylife.com/imageserve
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4%
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“Everybody Ought to be Rich”
• Business success
became almost a
religion for some.
• 1929 article stated
saving $15 a week
over 20 years could
bring a $400 a
month income from
investment – John J.
Raskob
• “Anyone can be
rich, but ought to
be rich”
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John J. Raskob
• was a financial executive and businessman for
DuPont and General Motors, and the builder of
the Empire State Building.
• He was chairman of the Democratic National
Committee from 1928 to 1932 and a key
supporter of Alfred E. Smith's candidacy for
President of the US.
• After Franklin D. Roosevelt became President,
Raskob was a prominent opponent of the New
Deal through his support of a number of antiRoosevelt organizations including the
American Liberty League.
• Raskob was also a leader in the Association
against Prohibition.
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• People wildly
buying stocks and
borrowing money.
• Hoover
administration did
nothing to
discourage
borrowing.
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Welfare Capitalism
• Economy stabilized – organized labor
lost members
• Companies launched strategies to
meet worker’s needs w/o demands
from unions
• New approach to labor relations =
Welfare Capitalism
• Employers raised wages and provided
benefits – pd. Vacations, health plans,
English classes for immigrants
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Economic Danger Signs
Uneven Prosperity - 1
• Rich got richer on stock market
• Huge corporations dominated industry
• 200 large companies controlled 49% of
U.S. Industry
• 1929 – 24,000 families (0.1% of
population) had incomes of more than
$100,000 – held 34% of U.S. total
savings
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• 71% families earned less than $2500 a
year
• 80% families had no savings
• Many families still required even
children to work for survival.
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Buying on Credit - 2
• Increase in personal
debt was another
sign.
• Bought things they
couldn’t afford.
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Playing the Stock Market - 3
• Climbing stock prices encouraged
widespread speculation – the practice
of making high-risk investments in
hopes of getting high gains.
• Before WWI only wealthy played stock
market.
• Press reported stories of ordinary
people who made fortunes.
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• Small investors entered market with their life
savings.
• Stock brokers encouraged buying on margin
• It allowed investors to purchase stock for a
fraction of its price (10-50%) and borrow the
rest.
• Brokers charged high interest and could
demand payment at anytime.
• If stock went up could pay off loan and
interest and still make money.
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Too Many Goods, Too Little
Demand - 4
• People could not afford to buy goods
as fast as assembly lines turned them
out.
• Overproduction caused industries to
slow down after 1925 – automobile
(associated industries) – housing
construction
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Trouble for Farmers - 5
• Farm prices plummeted after WWI
• Many farmers had bought machinery
= more land while prosperous
• Could not pay = banks suffered (6,000
out of business)
• McNary-Hugen Farm Relief Bill –
increase crop prices
• Congress passed in 1927 and 1928 –
President Coolidge vetoed – not
government job to provide assistance
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Trouble for Workers - 6
• Laborers still worked long hours for low
wages.
• TN – women worked 56 hours a week –
16 to 18 cents an hour = $10 a week
• Factors = uneven wealth, rising debt,
stock speculation, overproduction,
hardships of farmers/laborers = clear
signal of trouble in economy
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