1. American Consumerism and Speculation

2. What is a consumer?  Someone who purchases and uses goods or services

3. Examples of goods or services in the 1920s?  CARS  MOVIES  Houses  Clothes  Drinking/night life  All things people could consider “luxury” items

4. So what is consumerism?  Consumerism is defined as:  The Belief that spending money on goods or services is good for the economy.

5. So American Consumerism…  During the 1920s, the US experienced a period of SERIOUS economic growth  DEFINED: The rise of prosperity, and spending, in the United States during the 1920s.  This was due to advances in technology and innovative ideas in the areas of communication, transportation, and manufacturing.

6. The BUBBLE!  This increase in spending was largely due to a change in thought-process.  BEFORE: People avoided going into debt, and only bought what they had the money to afford.  THE 1920s: People began to buy on CREDIT, and pay back the place they borrowed from.  These businesses made their money off of INTEREST. The longer it took you to pay, the more you ended up paying.

7. Life in the 1920s  Economics  Increased production of goods and services  Buying on CREDIT  Increased standard of living  Increased consumer spending

8. Life in the 1920s  Government  Election of pro-business Presidents Warren Harding and Calvin Coolidge  Isolationist mindset (stay out of other countries business)  Set number of immigrants allowed  Taxes on imports to discourage business competition

9. Life in the 1920s  Technology  Growth of automobile industry  Introduction of airplanes as transportation  Widespread use of electricity  Advertising gains popularity

10. Life in the 1920s  Society  The fear/threat of Communism  Fear and distrust of immigrants  Fear of Unions and faith in business  Strikes, with many workers unhappy

11. Speculation  Speculation, as a word, is defined as: Forming a theory or idea without firm evidence.  Basically – a GUESS  Speculation began occurring a LOT in the 1920s on the Stock Market.  People would invest money in the Stock Market hoping to hit it big, and get rich quick.

12. The issue??  People invested on CREDIT. They invested money they didn’t have, hoping to make enough money to cover their loan AND to make some money.  Some stocks were more dangerous to bet on than others, but this is still a VERY bad practice.

13.  This meant that the money they invested into the stock market WASN’T REAL! The economy assumed it was real. This created a BUBBLE – the difference between the value the stock is, and the value people give it.  Because people bought stock on credit, the prices looked REALLY good and brought profit.  But if everyone took their money out of the stock market, what would happen?