Warm-up• What are the advantages and disadvantages of buying items on credit? Explain your answers please.

The Economy of the 1920s

Farmers

• Wartime production based on borrowed money

• World competition lowered prices by 50%

• Technological improvements resulted in more debt

• Did not share in prosperity of 20s

The Automobile• Ultimate consumer toy• Mass production

oHenry Ford-assembly line more efficient• Ripple effect on the economy

o3.7 million employed directly or indirectlyoStimulated other industries (steel,

rubber, glass, petroleum, chemical)oHighway construction (billion dollar a

year enterprise)• Spent leisure time traveling in cars

oOpened new business opportunities• Helped construction industry become one

of the few industries that really boomed in 20s.

Advertising and Consumption

• Grew with automobile industry

• Billion dollar industry

• New way to introduce modern technological products (washing machines, radios, vacuum cleaners, etc.)

• Enticed consumers to spend money they did not really have

• Led to mass consumption of items not considered necessities—materialistic items--- “stuff”

• Cultural ideal mostly for middle class; criterion for considering self-worth

• Brand names and chain stores

• New method of buying—credit—installment plan—buy now pay later ; the beginning of the credit card concept

Uneven Prosperity• African Americans lost their factory

jobs to returning servicemen• Native Americans (given citizenship

1924) held on reservations with little or no productive work

• Many immigrants couldn’t find work; farmers and factories paid low wages

• Deep South left out of economic boom as agricultural economic base eroded after the war

Activity:

Activity:• Packet