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

Americans Confront Postwar Controversy Threat of Communism

Bolshevik Revolution Communism Comintern Palmer Raids Anarchists

Ku Klux Klan W.A.S.P. Xenophobia Red Scare

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.

Americans Confront Postwar Controversy - continued

Labor Unrest Steelworkers Strike Coal Miners

John L. Lewis

Sacco and Vanzetti

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.

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

Warren G. Harding

President in 1921 Wanted U.S.,

Great Britain, France, Japan, & Italy to scrap large warships

They all did.

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

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.

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.

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

Calvin Coolidge

President from 1923-1929.

Was a pro-business president.

Buying on Credit

Installment PlanBuy goods with out putting $ downPay interest with paymentsWill cause HUGE problems in 1929

& the 1930’s

Modern Conveniences

THE GREAT DEPRESSION BEGINS

Photos by photographer Dorothea Lange

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

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 whileImportant industries struggled, including:

FARMERS STRUGGLE

No industry suffered as much as agriculture

During World War I European demand for American crops soared

After the war demand After the war demand plummetedplummeted

Farmers increased production sending prices further downward

Photo by Dorothea Lange

CONSUMER SPENDING DOWN

By the late 1920s, American consumers were buying consumers were buying lessless

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

GAP BETWEEN RICH & POOR

The gap between rich and The gap between rich and poor widenedpoor 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 families earned less than $2500 per yearless than $2500 per year

Photo by Dorothea Lange

SEEDS OF TROUBLE

By the late 1920s, problemsproblems with the economy emergedemerged

Speculation:Speculation: Too many Americans were engaged in speculation – buying stocks & bonds hoping for a quick profit

MarginMargin: Americans were buying “on margin” – paying a small percentage of a stock’s price as a down payment and borrowing the rest

The Stock Market’s bubble was about to break

HOOVER WINS 1928 ELECTION Republican Herbert

Hoover ran against Democrat Alfred E. Smith in the 1928 election1928 election

Hoover emphasized years of prosperity under Republican administrations

Hoover won an Hoover won an overwhelming victoryoverwhelming victory

Young Hoover supporter in 1928

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

THE STOCK MARKET

By 1929, many Americans were invested in the Stock Market

The Stock Market had become the most visible symbolmost visible symbol of a prosperous American economy

The Dow JonesDow 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

STOCK PRICES RISE THROUGH THE 1920s

Through most of the 1920s, stock prices rose steadily

The Dow reached a The Dow reached a high in 1929 of 381 high in 1929 of 381 pointspoints (300 points higher than 1924)

By 1929, 4 million Americans owned stocks

New York Stock Exchange

Black Tuesday

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.

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,On October 29, now known as Black TuesdayBlack 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 debtshuge debts

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

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