Check out these amusing ads from the 1920s! Don’t forget to be skimming your book @ home: Reconstruction WW2
$$ More Money, More Problems $$ $25,000 paid at once Installment buying: buying on credit • Buyers could take home a new fridge by putting a down payment & each month they paid an installment until they paid the full price PLUS INTEREST • “Buy Now, Pay Later” increased the demand for goods VS WHICH WOULD YOU RATHER DO? $5,000 paid over 5 times
Interest: monetary dues owed over time as a result of credit $5,000 five times = $25,000 (w/interest = $30,000)
Soaring Stock Market • Boom of the 20s gave the stock market a giant boost • Corporations sold stocks: shares of ownership sold to investors • Investors made or lost $$ depending on whether the price of shares went up or down
Bull Market • By late 20s: more people were investing in the stock market than ever • Stock prices rose so fast some people made fortunes overnight (this encouraged more to buy) • Bull market: period of increased stock & rising stock prices
Margin System • Many people bought stocks on a margin system: • An investor would buy stock for as little as 10% down payment • The buyer held the stock until the price rose & then sold it at profit • Margin buying worked as long as stock prices kept going up This works for me…
Problems Rising • In 1928 & 1929 – prices of many stocks rose faster than the value of the companies themselves • Experts warned that the bull market couldn’t last forever • Most investors ignored the warnings
Limited Role in World Affairs • After WW1, U.S. was world’s leader in economic power • Europeans expected U.S. to take a major role in world affairs • Harding & Coolidge wanted to continue peace in Europe, however they didn’t want the job of KEEPING world peace • Many Americans supported this return to pre-war isolationism
Latin America • During WW1 LA nations had been cut off from Europe • Result: U.S. trade/ investment in LA increased • Trade continued after war • U.S. limited its role abroad for fear that more involvement may push the country into war again
Soviet Union • Lenin is now the big cheese in Russia since the revolution • Lenin created the world’s first communist state (marx lenin) • Communism: economic system in which all wealth & property is owned by the community as a whole • U.S. refused to recognize Lenin’s government & disliked the idea of communism • Think…why?! What is U.S. built on?
Pursuing Peace • Post WW1 many people favored disarmament: a reduction in the armed forces & weapons of war • Harding & Coolidge also supported peace efforts
Pursuing Peace 1928 – U.S. & 61 other nations signed the Kellogg-Briand Pact : a treaty outlawing war • Treaty had a fatal flaw in that it didn’t set up any means for keeping peace • One nation could still use force against another without fear of punishment
NOW: • Brainstorm… • You’ll have 5 minutes to write as many things as you can…. • Imagine you’re giving someone a tour of your house • List the following per-room as you envision it: • Big pieces of furniture • Expensive artwork • Major appliances* this is a longer list* • Cars or other vehicles • Expensive technology (computers, TVs, laptops, etc…) **think you’re done? Make another lap! Inside/ outside/ basement/ attic, etc… ** WHO CAN LIST THE MOST???
Most likely, your parents bought most of these items in installments On average (Lowes.com, autobytel.com, bestbuy.com) : • New refrigerator: $480-$9,000 • New washer OR dryer: $300-$1,600 • New TV: $80-$8,500 • New car: $11,000 - $296,000 • To install an appliance: $380 • To refinish an appliance: $300 • To repair an appliance: $200 Something to think about!