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Big Business
Harding, Coolidge and Hoover all believed in laissez faire policies
Many progressive reforms overturned
Mergers on the rise
Period of great expansion
Unions
Union membership on decline throughout 1920s Effects of Red Scare
Government and courts sided with
business
Economic prosperity eases demand for
unions
The Automobile
1920s begins the “Automobile Age” Production goes up,
prices go down
Car ownership
expands
Stimulates economy
Automobile Age
The car helped the economy in several ways Demand for inputs Wages for labor Highway and road
construction
Henry Ford
Business pioneer“Fordism”
Mass production“Any color as long as
it’s black!” Mass consumption
Higher wages Americanization
Other Sectors Also Strong
Construction
Electrical Goods Modern conveniences Appliances Durable Goods
Entertainment
American Cities Grow
1920 Census: Over 50% of Americans live in cities
Detroit and Los Angeles arrive
But Farmers Have Problems
Prices that had risen as a result of WWI begin to fall
Many farmers had borrowed to buy land that is now worth much less
Attempts at farm subsidies were rejected by Coolidge
Were 1920s Prosperous for All?
Income inequality grew 1920: Top 1% earn 12% 1929: Top 1% earn 19%
But standard of living rose for all Electricity Sanitation Health care
Stock Market
A decade of impressive growth Bull market
By some measures, value more than triples Buying on margin
Put 40-50% down, borrow the rest Boom not based on fundamentals
Most believe it was “irrational exuberance” Similar to “Tech Bubble” in 2000