Chapter 25: Politics and a Thin Prosperity

1. Chapter 25: Politics and a Thin Prosperity • Americans Confront Postwar Controversy • The Nation Returns to Normalcy and Isolation • Coolidge Conducts the Nation’s Business • Problems Threaten Economic Prosperity • A Slipping Economy Signals the End of an Era

2. Americans Confront Postwar Controversy • Threat of Communism • Bolshevik Revolution • Communism • Comintern • Palmer Raids • Anarchists • Ku Klux Klan • W.A.S.P. • Xenophobia • Red Scare

3. Red Scare • Americans were afraid of Communists. • Communists called for a worldwide revolution against capitalism. • Sacco and Vanzetti were Italian immigrants and anarchists. • Charged with robbery and murder of two men. • Witnesses said the killers were Italian.

4. Americans Confront Postwar Controversy - continued • Labor Unrest • Steelworkers Strike • Coal Miners • John L. Lewis • Sacco and Vanzetti

5. Sacco & Vanzetti (con’t) • Sacco & Vanzetti had alibis. • Circumstantial evidence provided at the trial. • Judge made racist remarks and the jury sentenced them to death.

6. The Nation Returns to Normalcy and Isolation • Warren G. Harding • Return to Normalcy • Ohio Gang • Working for Peace • Kellogg-Briand Pact • Naval Holiday • Washington Naval Conference • Arms Race

7. Warren G. Harding • President in 1921 • Wanted U.S., Great Britain, France, Japan, & Italy to scrap large warships • They all did.

8. The Nation Returns to Normalcy and Isolation - continued • Isolationism • High Tariffs • Fordney-McCumber Tariff • Dawes Plan • Reparations • Limiting Immigration • Nativism • Quota System • Harding Scandal • Teapot Dome

9. Fordney-McCumber Tariff • Raised taxes over 60% on imports. • Because Great Britain and France could not pay back loans from WWI. • Great Britain and France could not pay us because Germany could not pay the $33 billion in reparations.

10. Teapot Dome Scandal • Secretary of the Interior, Albert Fall, did a secret leasing of oil-rich public land to private companies in return for $ and land. • Fall received over $400,000 of illegal $ • First government/company scandal.

11. Coolidge Conducts the Nation’s Business • Calvin Coolidge • Election of 1924 • Prosperous Times • Standard of Living Soars • Modern Conveniences • Electricity • Automobile • Urban Sprawl • Airplane • Retailers • Installment payments • Planned obsolescence • Modern Advertising

12. Calvin Coolidge • President from 1923-1929. • Was a pro-business president.

13. Buying on Credit • Installment Plan • Buy goods with out putting $ down • Pay interest with payments • Will cause HUGE problems in 1929 & the 1930’s

14. Modern Conveniences

15. THE GREAT DEPRESSION BEGINS Photos by photographer Dorothea Lange

16. Problems threaten Economic Prosperity • Economic Competition • Railroads • Textiles • Coal Mining • Farmers Suffer • Overproduction • Price Supports • Consumers • Less money to spend • Buying on margin • Uneven distribution of income

17. SECTION 4: THE NATION’S SICK ECONOMY • Agriculture • Railroads • Textiles • Steel • Mining • Lumber • Automobiles • Housing • Consumer goods As the 1920s advanced, serious problems threatened the economy while Important industries struggled, including:

18. FARMERS STRUGGLE • No industry suffered as much as agriculture • During World War I European demand for American crops soared • After the war demand plummeted • Farmers increased production sending prices further downward Photo by Dorothea Lange

19. CONSUMER SPENDING DOWN • By the late 1920s, American consumers were buying less • Rising prices, stagnant wages and overbuying on credit were to blame • Most people did not have the money to buy the flood of goods factories produced

20. GAP BETWEEN RICH & POOR • The gap between rich and poor widened • The wealthiest 1% saw their income rise 75% • The rest of the population saw an increase of only 9% • More than 70% of American families earned less than $2500 per year Photo by Dorothea Lange

21. SEEDS OF TROUBLE • By the late 1920s,problemswith the economy emerged • Speculation:Too many Americans were engaged in speculation – buying stocks & bonds hoping for a quick profit • Margin:Americans were buying “on margin” – paying a small percentage of a stock’s price as a downpayment and borrowing the rest The Stock Market’s bubble was about to break

22. HOOVER WINS 1928 ELECTION • Republican Herbert Hoover ran against Democrat Alfred E. Smith in the 1928 election • Hoover emphasized years of prosperity under Republican administrations • Hoover won an overwhelming victory

24. Young Hoover supporter in 1928

25. A Slipping Economy • Herbert Hoover • Election of 1928 • “America’s business is business” • Laissez-faire economics • Good Neighbor Policy • Stock Market Crashes • Speculation • Buying on margin • Black Tuesday • Great Depression

26. THE STOCK MARKET • By 1929, many Americans were invested in the Stock Market • The Stock Market had become the most visible symbol of a prosperous American economy • The Dow Jones Industrial Average was the barometer of the Stock Market’s worth • The Dow is a measure based on the price of 30 large firms

27. STOCK PRICES RISE THROUGH THE 1920s • Through most of the 1920s, stock prices rose steadily • The Dow reached a high in 1929 of 381 points (300 points higher than 1924) • By 1929, 4 million Americans owned stocks New York Stock Exchange

28. Black Tuesday

29. Stock Market Crashes • The market went down on October 24th, panicked investors sold their shares. • Black Tuesday– October 29, 1929, the bottom fell out of the market. • Those who tried to sell after Black Tuesday made stocks worth less money.

30. THE 1929 CRASH • In September the Stock Market had some unusual up & down movements • On October 24, the market took a plunge . . .the worst was yet to come • On October 29,now known asBlack Tuesday, the bottom fell out • 16.4 million shares were sold that day – prices plummeted • People who had bought on margin (credit) were stuck with huge debts

31. By mid-November, investors had lost about $30 billion

33. A Slipping Economy - continued • Four major causes of the Great Depression • Old and decaying industrial base • Crisis in the farm sector • Availability of easy credit • Unequal distribution of income • End of pure capitalism • Capitalism – Private Enterprise • Socialism – Public Ownership • Communism – Command Economy • Mixed Economy • Traditional Economy