Unit V: The 1920sFocus: The Stock Market Crash

“Everyone Ought to Be Rich”• "Being rich is, of course, a comparative status. A man with a

million dollars used to be considered rich, but so many people have at least that much these days, or are earning incomes in excess of a normal return from a million dollars, that a millionaire does not cause any comment . . . In my opinion the wealth of the country is bound to increase at a very rapid rate . . . Anyone who believes that opportunities are now closed and that from now on the country will get worse instead of better is welcome to the opinion—and whatever increment it will bring. I think that we have scarcely started . . . I am firm in my belief that anyone not only can be rich but ought to be rich . . .”

-John Raskob, Ladies’ Home Journal (Aug 1929)

Raskob: $15 a month in sound common stocks would grow to $80,000 in twenty years

New Consumer Commodities

• 1920: Radios, Hair Dryer, Radio Broadcasting• 1921: Band-aids• 1922: Insulin injections for diabetics• 1923: Traffic signals• 1924: Frozen Foods• 1926: Aerosol Sprays• 1927: Mechanical Refrigerator• 1928: Bubble Gum, Sliced Bread, Penicillin

• Others: automatic home dish washer, pop up toaster, home air conditioning, sized to fit clothing

Automobiles• Paved roads, the parcel post service, mass circulation magazines,

diners, motels, tourism…• Automobility• Mass Production & Taylorism… time & motion• Ford Production

– 1913: 12.5 hours– Early 1920s: 93 minutes (moving assembly line)– 1927: 24 seconds

• Auto Sales: 1.5 million (1921) to 5 million (1929)– End of the decade, Americans owned 80% of the world’s autos

• Economic Effect– Steel, petroleum & oil, chemical, rubber, and glass industries– Highway construction became a billion-dollar a year enterprise– Spurred the growth of suburbs, real estate speculation, and shopping plazas

• By 1929, almost 1/3 of Americans took vacations by automobiles

Relevant Economic Terms

• Demand• Supply• Price• Equilibrium • Market• Stock• Stock Market• Speculation / Speculator• Margin Buying• Bull Market• Bear Market