ECONOMY IN THE 1920'S

POSTWAR RECESSION IN 1921

• This created an economic dislocation.
• Unemployment increased and farmers suffered from a fall of prices.
• Not only until 1922 did the economy start to prosper and lead up to the boom.
• But the problems with prosperity started up again in 1929.

ECONOMIC OVERVIEW

• Items like automobiles were rapidly bought from credit.
• Appliances were also rapidly bought with aid of ads.
• Although economy boomed, some areas were still farming and mining.
• Buying from credit meant banks could lend you money or allow you to use ledgers to pay later.

STOCK MARKET IN THE 1920'S

• People began heavily investing in stock market because stock prices increased.
• Many people thought of it as a short term investment.
• As a result they sold stocks as soon as the price was at its highest for quick profit.
• In fact, banks put their customer's money to stabilize to try to boom prices.

STOCK MARKET CRASH OF '29

• Many Americans were so eager to get in the stock market that they "bought on margins"
• This meant that a buyer would pay 10-20% up front, and borrow the rest from a broker
• When the value of the stock dropped below the loan amount, brokers would issue a "margin call"
• This forced buyers to pay back their entire loan immediately

STOCK MARKET CRASH OF '29

• Leading up to the crash:
• More and more buyers bought on margins
• Banks invested their customers' money in the stock market without their knowledge
• Steel, house, and car production slowed
• And several small crashes occurred

STOCK MARKET CRASH OF '29

• October 24 came to be known as Black Thursday
• Prices dropped drastically, margin calls were issued, and panicked investors sold $12.9 million in stock
• A group of bankers invested millions back into the market that afternoon
• Which convinced many to stay calm and keep their money in stocks, delaying the inevitable crash
• Now, even more people were buying because the prices were so low they felt they were getting a bargain

STOCK MARKET CRASH OF '29

• Black Tuesday (October 29) the stock market fell
• 16.9 million shares were sold in an attempt to get out of the market quickly
• The stock market was shut down completely for a few days in November
• And continued to drop for the next two years
• Until finally reaching its lowest point in July of 1932

RESULTS OF THE CRASH

• The time of prosperity and gain was devastated
• Many people lost their entire life savings
• Rumors of mass suicides
• Large businesses failed
• And all faith in the banking system was gone

THE GREAT DEPRESSION

• The stock market crash did lead to the Great Depression, but it was also caused by:
• Bank failures
• An increase in unemployment and a decrease in buying
• A decrease in foreign trade due to a higher tax on imports
• The drought in the Midwest

CONSUMERISM IN THE 1920'S

• Household appliances were widely bought and sold.
• Refrigerators, vacuum cleaners, and washing machines are some examples.
• The entertainment industry also kicked off.
• Movies, jazz music, and radio emerged at this time.

ASSEMBLY LINE

• Henry Ford wanted to make a car that was cheap and sturdy enough for the public
• He incorporated the assembly line method from slaughterhouses,
• Conveyor belts from grain mills,
• And research from scientist Fredrick Taylor
• To introduce the assembly line to his automobile plant in Michigan in 1913

HENRY FORD'S ASSEMBLY LINE

• He broke down the construction of the Model T into 84 steps
• And assigned each worker a single job.
• Ford used "interchangeable parts"
• Which meant that each car was made of the exact same, mass produced, parts

HENRY FORD'S ASSEMBLY LINE