THE 1920S BOOM AND BUST

WORLD WAR I ’ S EFFECTS  Significant labor shortages  Need for increased production means new, more efficient methods of production  Old industries, such as petroleum and steel, stimulated  New industries, such as plastic and rayon, created  In 1915 the total annual expenditure was $600 million, which grew to $2.5 billion by 1918

BUSINESS BOOM IN THE 1920S  A self-perpetuating cycle emerged:  better machinery in factories led to  higher production and higher wages, which led to  more demand for consumer goods  Which led back to more standardized mass production

MANAGEMENT  New middle class  Higher education requirements  Research departments for competition  “Taylorism”  Frederick Winslow Taylor  “scientific management”  “time-and-motion studies”  Humans should work like machines  Ford adopts this model

HENRY FORD  Reliable and cheap  Paved way for expansion in:  Steel, glass, rubber, petrol, road construction service stations, etc.  110,000 employees in Detroit alone  Created personnel office  Improved the lives of his workers

GROWTH OF CONSUMERISM  Thorstein Veblen, economist, published The Theory of the Leisure Class in 1899 as a critique of consumerism  Conspicuous Consumption—use of money and resources to display higher status  the creation of the leisure class creates subjugation of women, growth of sport, etiquette, waste  Advertising  Credit

EXAMPLE OF CONSUMERISM: MOVIES  1922—40 million tickets per week  1929—100 million tickets per week  Movies became one of the ten largest industries in the U.S.

EXAMPLE OF CONSUMERISM: RADIO  1922—3 million American households had radios,  1929—$850 million in sales per year  Brings American closer together  Creation of common culture, language, speech  Use of leisure time  Use of advertising

NORMALISM VS. MODERNITY Normalcy  Reassess the role of the United States in the world.  A quest to slow down the speed of change gripping the United States  a rejection of communism (Red Scare)  opposition to immigrants (Quotas),  growing power of the KKK,  the rural rationale for prohibition  rejection of Darwin's theories through the rise of religious fundamentalism (Scopes Monkey Trial).  Normalcy stood in contrast to the growth of cultural modernism in the United States. Modernism  improvements in the status of women  the sexual frankness of Sigmund Freud  the dress and attitude of the flapper  the music, art, and literature of Harlem  and the writings of the Lost Generation.

CHANGES IN INDUSTRY – A RETURN TO LAISSEZ-FAIRE  The Chamber of Commerce and the National Association of Manufacturers preached a return to laissez-faire economics, less regulation of business, and less support of labor unions  The National Association of Manufacturers labeled this program as “ The American Way ”  President Harding asked for “ less government in business and more business in government. ”

OCTOBER 24, 1929  Credit crunch  Growing gap in wealth distribution  The total amount of bonuses paid to Wall Street workers was $11 billion more than the total amount made by all full time minimum wage workers in MSNBC  Restrictions on immigration  Stock Market Speculation  Margin buying  Crash  Stock values plummet $14 billion in one day  50% by December  Additional 30% by 1932

MISTAKES  Federal Reserve Board  Hawley-Smoot Tariff Act of 1930  Lower taxes on wealthy lead to mal-distribution of wealth  Decreased consumer spending

HOOVER’S RESPONSE  Refused to acknowledge the seriousness of the depression  "Either we shall have a society based upon ordered liberty and the initiative of the individual, or we shall have a planned society that means dictation no matter what you call it.... There is no half-way ground."  Revenue Act  Decrease deficit by raising taxes  No welfare for homeless or unemployed – rugged individualism  Paid to feed livestock but not farmers  Aide for banks but not municipal workers or teachers