The Economy of the 1920s 22-4

Industrial Growth After WWI ended it was followed by severe recession in agriculture and industry From 1922 to 1928 industrial production climbed 70% Many companies switched to producing consumer goods instead of producing military goods Refrigerators, radios, and cars filled the market Prices dropped when more goods came to the markets To encourage people to buy more goods businesses offered installment buying Americans got 75% of their cars on the installment plan in 1925 There were new forms of advertising with images of things people should buy Middle-class women were affected by these changes Vacuum cleaners, toasters, washing machines, and refrigerators all lightened the household workload Installment buying- buying on credit

Continue Government policies helped boost the economy Taxes on the wealthy were cut to encourage greater spending Ford announced its new model in 1928 500,000 or a half a million people made a down payment on their car without seeing it

A Booming Stock Market People started investing in the stock market stock values kept on rising. This was called a bull market As the market continued to rise, investors had no problem paying the loan back Many Americans grew wealthy by buying and selling stocks Investors accumulated fortunes By 1928, economists began to worry Experts warned that the stock market was overvalued Investors ignored the warnings Investors preferred to listen to predictions. Like this one spoken by Irwin Fisher, “ The nation is marching along a permanently high plateau of prosperity”. Irwin Fisher was a professor of economics in 1929. The wealthiest Americans made up about 5% of the population Bull market- Rising of stock prices Buying on margin -Borrowing money in order to buy stocks Accumulate- To slowly collect

Signs of trouble ( farmers) Farmers didn’t participate in the good times There are several reasons for the agricultural depression One of the reasons were that farmers grew far more crops than the American public could consume Demand for American farm products declined after the war, because many nations were to poor to purchase them High debt was another reason for rural poverty In the good years, farmers had taken out loans to buy new lands and equipment After the war, sales went down Many farmers were unable to pay off their debts

Signs of trouble ( Workers) Wages were rising Companies also began offering new benefits, such as pensions and paid vacations, in an attempt to keep their workers from joining unions Unemployment was high People who had jobs found their jobs changing The assembly line system was squeezing out skilled labor Unskilled workers could handle the work- and they received lower pay

The Election of 1928 The Republicans had held the presidency and they claimed responsibility for the decade’s prosperity For the Republicans candidate in the presidential election of 1928, they chose Secretary of Commerce Herbert Hoover The Democrats nominated Governor Alfred E. Smith Smith was the first Catholic ever to run for president Religion became one of the issues Immigrants, Catholics, and urban residents tended to support Smith Rural residents and Protestants tended to support Hoover Economy was another major issue Hoover pledged to continue the policies he credited for prosperity Smith won the largest cities, but he lost every state but Massachusetts and six Deep South states Hoover won the special strength in rural areas Herbert Hoover entered the White House in 1929

Herbert Hoover Alfred E. Smith

Video :) 1920’s economy

BY: Clara J.