A Growing Economy

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A Growing Economy

• Chapter 10, Lesson 1, Page 322

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Changes in Production

• The U.S. economy grew during the 1920s.
• After World War I ended, people turned their
  attention away from world problems.
• They elected a popular new President, Warren G.
  Harding, in 1920.
• He believed that Americans were tired of war.

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Changes in Production

• The economy of the United States went through a
  boom after world war I.
• A boom is a period of fast economic growth.
• One reason for the boom was an increase in
  international trade during and after the war.
• Most European nations had borrowed money from the
  United States during the war.
• When the war ended, their repayments of these
  debts helped the United States become the richest
  country in the world.

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The Automobile Industry

• The entrepreneur Henry Ford added to the boom by
  making cars in a new way.
• When he founded Ford Motor Company in 1910, his
  companys factories began using mass production.
• Mass production means using machines to make many
  products at once.

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The Automobile Industry

• To produce large numbers of cars, Ford set up
  assembly lines.
• An assembly line is a long line of workers and
  equipment.
• Each group of workers on an assembly line does
  one job.
• This way of organizing work is called division of
  labor.

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The Automobile Industry

• When a company uses division of labor, each
  worker or group of workers has one small task in
  a big project.
• Using these methods, Fords factories could
  produce cars more quickly and inexpensively than
  they had before mass production.

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The Automobile Industry

• Because Ford spent less money to make his cars,
  he could charge lower prices for them.
• He could also pay his workers more and still earn
  a profit.
• Low prices and higher wages meant more people
  could buy Fords cars.
• For the first time, many Americans owned cars,
  vacuum cleaners, washing machines, and toasters.

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Saving and Investing

• In 1920s, people looked for places to put their
  money.
• Many people kept money in savings accounts at
  banks.
• Banks hold peoples savings and make loans to
  individuals and businesses.

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Saving and Investing

• Other people invested money.
• To invest means to use savings in the hope of
  earning more money in the future.
• Lots of Americans invested in stocks.
• A stock is a share of ownership in a company.

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Saving and Investing

• When a company earns money, the value of its
  stock usually increases.
• Then the people who own stocks, also known as
  stockholders, can sell it at a higher price to
  earn money.
• When the value of the stock falls, however, the
  stockholder can lose money.
• The place where stocks are bought and sold is
  called a stock market.

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Government in the 1920s

• The government encouraged economic growth during
  the 1920s.
• The United States elected three Presidents in the
  1920s Warren G. Harding, Calvin Coolidge, and
  Herbert Hoover.
• They were all similar in their thinking.

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Government in the 1920s

• Each of the Presidents were Republican and each
  encouraged strong economic growth in the United
  States.
• Coolidge wanted the government to act like a
  business.
• He wanted them to spend low.
• He also cut taxes.

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Government in the 1920s

• He cut taxes because he believed that if taxes
  were lower, people would have more money to save
  and invest.
• Hoover believed that the government should not do
  too many things to change the economy.
• He believed real economic growth came from the
  hard work of ordinary people.
• He thought that hard workers were the source of
  Americas prosperity.