1. The Economy in the late 1920s
Angela Brown
Chapter 12 Section 1

2. 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)

3. Economy Appears Healthy
Hoover self-made millionaire – widely admired
Organized food relief in Europe during WWI.
Sec. of Commerce under Harding-Coolidge
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4. “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 4%
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5. “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”

6. 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 anti-Roosevelt organizations including the American Liberty League.
Raskob was also a leader in the Association against Prohibition.

7. People wildly buying stocks and borrowing money.
Hoover administration did nothing to discourage borrowing.
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8. 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

9. 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

10. 71% families earned less than $2500 a year
80% families had no savings
Many families still required even children to work for survival.

11. Buying on Credit - 2 Increase in personal debt was another sign.
Bought things they couldn’t afford.
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12. 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.

13. 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.

14. 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

15. 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

16. 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