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The Economy

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					  The Economy

Prosperity of the 1920s
    “Return to Normalcy”- Economy
               Overview
• Economic boom “prosperity”- 1920-1929
  – Impact of Automobile= launching pad to many other
    industries, business, growth, new way of life
  – Airplane Industry= transatlantic passenger flights
  – Alternating Electrical Current= able to transfer
    electricity over longer distances; new appliances
  – Increased production= mergers, chain stores, banks
    branch out, growth in business= wider income gap
  – Modern advertising= Wants become needs.= Growth
    of Consumerism Example= Listerine
  – Installment Plan= Buy on credit, banks lend at low
    rates = accumulation of debt
Henry Ford and his Model T, 1921
Airplanes
Electricity
• Alternating
  Electrical
  Current
• New appliances
• Makes peoples’
  lives easier
Production and Consumerism
                   On the Farm
• Farmers bought new farm equipment on loans (farm
  credit)– predicted the crop prices to stay high
• New technology/machines=increase crop yield
• Farmers no longer had a market in Europe post WWI–
  farmers were producing more than they could sell
• Law of Supply and Demand= increase amount of the
  good, decrease in price.

• Farmers started to default on their loans, they could not
  pay the banks back.
             Stock Market
        Bull Market 1921-1929

• Because of economic prosperity
  between the years of 1921 and
  1929, many investors became
  instant millionaires.
• Speculation & Buying Stocks on
  Margin– over inflated market.
  Businesses were not actually
  worth as much as their stocks
  were.
• Fear and panic took hold once
  people realized they were losing
  money
• Black Tuesday
  1920s Underlying Problems that caused
        the The Great Depression


• Financial crisis for     • Uneven distribution of
  farmers?                   wealth?
• Industries in trouble?   • Speculation?
• Consumer debt and        • Lack of foreign market?
  living on credit?        • Cycle of Depression?

				
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posted:4/30/2010
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