1. The Business of Government.
EQ 1: How did domestic and foreign policy change direction under Harding and Coolidge?
EQ2: How did the booming economy of the 1920’s lead to changes in American life?

2. Return to Normalcy Warren G. Harding
called for a return to “normalcy”
this meant isolationism and laissez-faire
critics said that this basically wiped out the reforms of the Progressive Era
Why would this concern some Americans?
Harding died of a heart attack halfway through his presidency
criticized for allowing his poker buddies to rip off the country
What did this mean after the Great War?
What is isolationism and laissez-faire?
(1921 – 1923)

3. Return to Normalcy Andrew Mellon, Sec. of the Treasury
argued that lower taxes would stimulate business investment which creates jobs
cut the income tax rates
reduced national debt
Can you explain the reasoning for doing so? Would these ideas still be popular today?

4. Return to Normalcy Calvin Coolidge (1923 – 1929)
“Silent Cal” was seen as honest and frugal
he refused to spend government money to buy farm surpluses
Why would he refuse to help farmers? Is it the Government’s business to help people?
“The chief business of the American people is business.”

5. Isolationism
US refused to join the League of Nations
the US raised its taxes on trade
Washington Naval Disarmament Conference, 1921
reduced the sizes of the US, Japanese, and British navies in the Pacific
Kellogg-Briand Pact, 1928
62 nations signed a pledge to outlaw war
How did these acts symbolize the withdrawal of America from World Affairs?

6. Isolationism Dawes Plan, 1924
the US loaned money to Germany so it could pay reparations to Britain and France
Britain and France then paid the US money they had borrowed during WWI
Can you predict any problems that will arise from such a relationship?

7. The Automobile Drives Prosperity
Henry Ford (1863 – 1947)
combined mass production with high wages
tried to pay his workers enough that they could buy his cars
“I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be low in price that no man making a good salary will be unable to own one-and enjoy with his family the blessing of hours of pleasure in God's great open spaces.”

8. The Automobile Drives Prosperity
The Model T, 1908
Ford marketed this car to the middle class
the car cost $850 in 1908 but the price dropped to $295 by 1927
car ownership went from 10% of American families in 1919 to 56% in 1927
over 15 million were produced
"Any customer can have a car painted any color that he wants so long as it is black."

9. The Automobile Drives Prosperity
How did the automobile change the nation?
stimulated economic growth
resources, roads, service stations, diners, motels, insurance
freedom of movement
unlike the train, you could go wherever you wanted whenever you wanted
helped create “urban sprawl”
spread cities out to the suburbs

10. Answers:
1. B
2. D

11. Mass Production
Assembly Line
techniques to produce goods in large numbers were popularized by Henry Ford
standardized parts and the assembly line lowered the cost of production
provided lots of jobs that required little expertise
made things affordable that had been too expensive for average people
How did this contribute to the prosperity of the 1920s?

12. A Bustling Economy Consumerism Advertising Installment Buying (Credit)
money saved during WWI, was now spent on new, affordable goods
vacuum cleaner, electric iron, electric washing machines, radios, refrigerators
Advertising
used scientific techniques to play on peoples desires and fears
Installment Buying (Credit)
people could own products that they otherwise could not afford
How did these change the way people spend money?
Listerine's new ads featured forlorn young women and men, eager for marriage but turned off by their mate's rotten breath. "Can I be happy with him in spite of that?" one maiden asked herself. In just seven years, the company's revenues rose from $115,000 to more than $8 million.

15. The Stock Market Bull Market a period of rising stock prices
4 million Americans owned stock by 1929
economists claimed that the value of stocks would always rise
Can you explain why Americans were so optimistic in this time?

16. The Stock Market How did this allow more people to buy stock?
Buying on Margin
the buyer paid 10% down and had months to pay the rest
the stock was the collateral for the loan
people figured that by the time the money was due they could sell the stock for a profit
How did this allow more people to buy stock?
People paid 10% of stock price, and could “make payments” on the rest, causing them to buy more than they could afford.