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Late 1920s Economy

Late 1920s Economy. 14.3. “Wonderful Prosperity”. Stock market value keeps increasing 1925 = $27 billion 1929 = $87 billion Average wages had risen 40% since 1914. Unemployment < 4% Popular literature Jesus, the businessman ( The Man Nobody Knows ) “Everybody Ought to Be Rich” (article).

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Late 1920s Economy

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  1. Late 1920s Economy 14.3

  2. “Wonderful Prosperity” • Stock market value keeps increasing • 1925 = $27 billion • 1929 = $87 billion • Average wages hadrisen 40% since 1914. • Unemployment < 4% • Popular literature • Jesus, the businessman (The Man Nobody Knows) • “Everybody Ought to Be Rich” (article)

  3. Other Positives • Welfare Capitalism • Meeting the needs of workers to prevent labor strikes • Higher wages • Paid vacations • Health plans • Recreation programs • English classes forimmigrants

  4. Bad Signs • Personal debt • America’s personal debt rose ~70% during the 1920s. • Buying fancy goods, but no money in the pocket • Stock Market Speculation • “Get rich quick” schemes • Investments: high-risk, high-reward • Buying on Margin • Purchasing a stock for only a fraction (10%) of the value • Borrow the rest of the money w/ high-interest loan • When (if) stock value increases, sell & pay off loan.

  5. Bad Signs • Overproduction of goods • Overstocked warehouses • Farmers / rural banks fail • President Coolidge vetoed any gov’t aid to farmers. • Banks failed when farmers could not pay back loans. • Uneven distribution of wealth • Mainly, the rich got richer. • 71% lived below the “minimum standard of living.” • 80% of all families had no savings. • 60% of the time, it works every time.

  6. How bad could it be? Pretty bad.

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