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America's Business Era: Coolidge's Prosperity & Stock Market Crash 1923-1929

Explore the Coolidge years, from his presidency to the roaring '20s prosperity, stock market boom, and eventual crash in 1929 that led to the Great Depression.

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America's Business Era: Coolidge's Prosperity & Stock Market Crash 1923-1929

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  1. Chapter 39 The New Era: When America Was a Business 1923–1929

  2. The Coolidge Years • Calvin Coolidge • “Silent Cal,” impeccably proper, even dreary • Was an able speech giver • Willing to let business take lead • Cleaned house after Harding scandals • 1824 Republicans nominate Coolidge • Democrats split, nominated John Davis • Coolidge won easily • Andrew Mellon’s tax policies • Says growth depends on capitalists reinvesting • Lowers taxes for rich • High Fordney-McCumber tariff, regressive taxes • Believes investments will “trickle down”

  3. The Coolidge Years (cont.’d) • Foreign Policy • German reparation payments to France, Britain • France, Britain repay loans to U.S. • Creates international financial strain • U.S. agrees to reschedule payments – Dawes plan

  4. Prosperity and Business Culture • Prosperity continues through 1920s • Republicans control Congress • Democrats strong in South and a few cities • Election of 1928 • Republicans nominate Herbert Hoover • Democrats nominate Alfred E. Smith • Smith hurt by Catholicism; Prohibition • Hoover wins easily

  5. Prosperity and Business Culture (cont.’d) • Productivity soaring • Work force showing little growth • Wages do not keep up with prices • Most Americans satisfied • Buy now, pay later • Americans typically borrow for homes or to create wealth • 1920s Americans buy consumer goods on installment • Level of consumer debt rising rapidly • Advertising • At first advertising just announcements • Business learns value of repetition • 1920s advertisers use psychology • Exploit anxieties, use sexual titillation

  6. Prosperity and Business Culture (cont.’d) • Chain stores • More retailing on nationwide basis • Chain stores undersell small businesses • Vertical integration • Limits of prosperity • Buying cannot go on forever • Not all Americans share good times • Farmers hurting economically • Many rural minorities hurting • Business culture • Business service clubs • Bruce Barton, The Man Nobody Knows • John Jacob Raskob: everyone should invest • New interest in get-rich-quick schemes

  7. Get Rich Quick • Florida land boom • Buy land expecting values to rise • Boom follows as prices skyrocket • Hurricane triggers crash • The Bull Market • 1927 stock prices soar • More people invest • Prices have little relation to value • Federal Reserve lowers interest rates • Buying on margin • Middle class invests in stock market • Investors buy “on margin” • Put down as little as 10% of price • Expect price to continue to rise

  8. Get Rich Quick (cont.’d) • Stock Market Crash • September 3, 1929 prices peak, then drop • Prices unstable for month • October 24 values collapse • October 29 crash worsens • Crash does not cause depression • Crash does accelerate depression • Middle class loses savings, banks close • Businesses close, unemployment soars

  9. Discussion Questions • What sort of president was Calvin Coolidge? How did he deal with the scandals of the previous administration? • What was the Kellogg-Briand Treaty? What was the intrinsic fault with its premise and what does it say about this period of history? • Examine the prosperity of the 1920s. What factors drove it and what potential problems dwelled in the backdrop? • What caused the stock market to crash in 1929? What effect did it have on the U.S. and world economies?

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