THE FEDERAL RESERVE AND THE 1920’S

THE FEDERAL RESERVE

• President Woodrow Wilson won the election of 1912, and 1916

• One of President Wilson’s progressive ideas was to reform (change) the U.S. financially

THE FEDERAL RESERVE

• President Wilson creates one of the most important financial systems in U.S. History in 1913:

• The Federal Reserve System: The bank of the United States

• It was created to bring stability to the economy and is still in use today

THE FEDERAL RESERVE

• What can the Federal Reserve System do?

• 1. Issue a new currency

• 2. Control the amount of money that is available to the public to control inflation: the rising cost of goods and the decrease in value of our money

• 3. Raise or lower interest rates on loans (Booming economy = Raise; Slowing economy = Lower)

THE FEDERAL RESERVE AND THE 1920S

• As WWI begins in 1914, America’s attention shifts to Europe and keeping us out of the war

• This would end the Progressive Era in America

• The U.S. joins the war in 1917 and the fighting ends two years later

THE 1920S

• By 1920, America wanted a “return to normalcy” and isolationism from WWI

• As America focuses on itself once again, we become very suspicious of immigrants

• The Red Scare: A crusade against suspected enemies of the state, mostly Communists and immigrants from Southern and Eastern Europe

THE 1920S

• The F.B.I. is created by J. Edgar Hoover and law enforcement takes over

• The U.S. responds to the Red Scare with the Palmer Raids: Kidnappings of innocent Americans who were suspected communists

• Constitutional??

THE 1920S

• Certain individuals didn’t fear anyone…. Women!

• Women felt a new freedom in the 1920s and broke away from societal norms. They stayed out late, smoked in public, and wore shorter clothes.

• These women were known as the Flappers

THE 1920S

• African-Americans also have their time to shine!

• Harlem Renaissance: The celebration of African-American culture in the 1920s

• Music, poetry, jazz, art, and African-American culture begin to be noticed across America

• (Rap = Rhythm and Poetry)

THE 1920S

• It was not a great time for alcohol however

• 1919 the 18th Amendment is passed banning alcohol in this country: Prohibition

• Immediately you see the rise of “bootleggers,” “speakeasies,” and gangster warfare

• 1933 the 21st Amendment is passed bringing alcohol back into the country

THE 1920S

• It is a wonderful time for business as wages increased, unemployment fell, and new inventions were being mass produced

• The refrigerator, washing machine, stove, but above all else…

• The Automobile!

THE 1920S

• Henry Ford now uses the Assembly Line to mass produce his Model –T car, making it affordable for most Americans

• This gives rise to major roads, gas stations, highway billboards, and mechanic shops

• It also results in Suburbanization: People start living away from the cities in suburbs

THE 1920S

• As the 1920s rolls along, the economy starts to slow down

• Businesses overproduce goods resulting in profits falling

• Unemployment begins to rise and stock prices begin to fall and don’t stop until…..