The Boom Economy of the 1920s

An Exploration

Big Business

Harding, Coolidge and Hoover all believed in laissez faire policies

Many progressive reforms overturned

Mergers on the rise

Period of great expansion

Union membership

Unions

Union membership on decline throughout 1920s Effects of Red Scare

Government and courts sided with

business

Economic prosperity eases demand for

unions

The Automobile

1920s begins the “Automobile Age” Production goes up,

prices go down

Car ownership

expands

Stimulates economy

Automobile Age

The car helped the economy in several ways Demand for inputs Wages for labor Highway and road

construction

Henry Ford

Business pioneer“Fordism”

Mass production“Any color as long as

it’s black!” Mass consumption

Higher wages Americanization

Other Sectors Also Strong

Construction

Electrical Goods Modern conveniences Appliances Durable Goods

Entertainment

Critical Thinking

What is the significance of the expansion of radio?

American Cities Grow

1920 Census: Over 50% of Americans live in cities

Detroit and Los Angeles arrive

But Farmers Have Problems

Prices that had risen as a result of WWI begin to fall

Many farmers had borrowed to buy land that is now worth much less

Attempts at farm subsidies were rejected by Coolidge

Were 1920s Prosperous for All?

Income inequality grew 1920: Top 1% earn 12% 1929: Top 1% earn 19%

But standard of living rose for all Electricity Sanitation Health care

Stock Market

A decade of impressive growth Bull market

By some measures, value more than triples Buying on margin

Put 40-50% down, borrow the rest Boom not based on fundamentals

Most believe it was “irrational exuberance” Similar to “Tech Bubble” in 2000

What Goes Up…