Economy in the late 1920s

1
Economy in the late 1920s

• 14-3

2
Prosperity

• Many Americans optimistic
• Stock Market valued at 27 billion in 1925
• By 1929 stocks are 87 billion
• Workers wages rise
• Unemployment below 4 percent
• The Man Nobody Knows (1925)
• Bruce Barton
• Story of Jesus in business terms

3
Welfare Capitalism

• Companies plan to meet workers demands
• Attempt to avoid union intervention, strikes, and
  keep high productivity
• Raised wages, paid vacations, health plans, rec.
  programs, English classes for immigrants
• Increase company loyalty and morale

4
Dangers Ahead

• Mainly rich who got richer
• Corporations dominate
• Few families held wealth
• 71 percent of individuals and families earned
  less that 2,500 a year
• Taxes helped problem
• Tax cuts went to wealthiest

5
Personal Debt

• People buying more
• Credit spending
• Relied on future income
• Installment plans help luxury items

6
Stock Market

• Get-rich-quick
• Climb of Stock prices encouraged
  speculationpractice of making high risk
  investments
• Press said ordinary people made it big in stocks
• Buying on Margin allowed investors to purchase a
  stock for only a fraction of its price (10 to 50
  percent) and borrow the rest
• Interest rates are high

7
Supply and Demand

• Warehouses overstocked
• More goods than consumers wanted
• People could not afford to buy goods as fast as
  assembly lines produced
• OVERPRODUCTION
• Automobile and housing market fall

8
Farmers

• Cant pay debts (falling prices)
• Lose farms
• McNary-Haugen relief bill
• Made to increase the prices farmers received for
  crops
• Vetoed by Coolidge (not gov.s job)

9
Workers

• Long hours and low wages
• Bad conditions
• Overall Reasons for Trouble
• Uneven wealth
• rising debt
• stock speculation
• overproduction
• hardships of farmers and workers