chapter 21 section 3
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Chapter 21 Section 3. The Economy in the Late 1920s. How did a decade of Republican government affected the economy?. Republican laissez-faire policies caused rapid business expansion, opening up new opportunities for competitors to the giant monopolies - PowerPoint PPT PresentationTRANSCRIPT
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Chapter 21 Section 3
The Economy in the Late 1920s
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How did a decade of Republican government affected the economy?
• Republican laissez-faire policies caused rapid business expansion, opening up new opportunities for competitors to the giant monopolies
• The automobile, steel, oil, and electrical industries boomed as did publishing, movie, and machine making industries
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Welfare Capitalism
• Employers raised wages and provided benefits like paid vacations, health plans, recreation programs, and English classes for immigrants– Strengthened company
loyalty and worker morale
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Evaluate welfare capitalism from the point of view of a factory worker, a labor union leader, and a factory owner.
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Factory Worker
• Support, due to increased wages and benefits
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Labor Union Leader
• Oppose, as it would mean a decrease in union membership
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A Factory Owner
• Mixed• Had to offer employees
more money and benefits
• But avoided strokes and could thereby maintain increased productivity
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What reasons did corporations have for practicing welfare capitalism in the 1920s?
• They hoped to meet workers’ demands while avoiding union intervention, preventing strikes, and keeping productivity high
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Looking at the circle graph on page 732, what percentage of American families were earning less than $2,000a year in 1929?
• 65%
• Note- $2,000 in 1929 is worth $26,666.67 today
• Poverty line in 2013 for a family of 4 is $23,021
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How do you think a widespread increase in personal debt could affect a nation’s economy?
• If people are earning less, people are less able to pay back their loans
• This would then result in lenders being able to give out less money
• Could also result in people buying less, resulting in businesses being less successful– May lead to workers losing
their jobs
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Speculation
• The practice of making high risk investments in hope of getting a huge return
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Why was speculation in the stock market so popular in the 1920s?
• The optimism of the age• The prevalence of a “get
rich quick” mentality• The rise in stock values
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Buying on Margin
• This allowed investors to purchase a stock for only a fraction of its price and borrow the rest– As long as stock go up,
everything is fine– If stocks drop…there’s
problems
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How does a stockbroker profit from an investor buying on margin?
• The brokers charge high interest rates and could demand payment of the loan at any time
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What issues faced farm and factory workers in the late 1920s?
• Falling farm prices left farmers unable to repay their debts, facing the loss of their farms
• Factory workers faced long hours for low wages and in poor conditions