1. The Economy of the 1920’s Chapter 14, Section 3

2. Setting the Scene:
What were three reasons Americans were optimistic in the early 1920’s?
Medical advances had reduced deaths from whooping cough, diphtheria, and other diseases.
Infant deaths had declined.
Life expectancy had increased.

3. Signs of Economic Health

4. Value of the Stock Market
The overall value of the market increased from $27 billion in 1925 to $87 billion in 1929.

5. Wages were up by 40%!
This meant many (but not all) workers were making more money.

6. Unemployment was less than 4%.
The vast majority of American men that wanted to work could find a job.

7. “Everybody ought to be rich!”
Many experts said that all Americans could be rich by investing in the Stock market, leading many people who wouldn’t normally invest to try their luck in the market.

8. Welfare capitalism
Provided Higher wages, benefits, health plans and paid vacations
This kept production high and workers out of the unions.

9. Economic Danger Signs

10. Uneven Prosperity The economic boom mainly benefited the rich
200 companies control 49% of the economy
.01% of the population controls 34% of the countries savings.
71% of Americans live at the poverty line
80% of Americans have no savings at all.

11. Personal Debt Consumer credit – ANYONE CAN GET IT!
Installment plans – BUY NOW! PAY LATER!

12. Playing the Stock Market
Get Rich Quick!
Speculation – high risk investments
Buying on margin – buying stocks with borrowed money

13. Overproduction
Too many goods, too few buyers equals a surplus.

14. Farmers Struggle
Falling crop prices mean farmers cannot repay debts, which means banks fail.

15. Factory Workers Struggle
Wages in many industries were still low.
Factory workers had little or no financial safety net.
Despite this, people felt that the good times were going to continue.