Getting to California

1. Ch 16 Sec 3: Policies of Prosperity • supply side economics – the belief that if the taxes of the wealthiest Americans are cut they will use that money to invest in the economy and it will “trickle down” to others • isolationism – American investors caution towards investing in a war torn Europe and putting “America First” • Dawes Plan– American banks made loans to Germany so they could pay war reparations to England and France who used the money to pay America back for WWI loans. • Kellogg-Briand Pact– treaty signed in 1928 that “outlawed war” • Bull market – a long period of rising stock prices • Buying on margin – buying stock on credit by putting little money down and using a bank loan to invest in the stock market. As the stock prices falls, banks make margin calls • speculation - investing in the stock market based on the performance of the stock rather than the performance of the company (looking for a quick profit) Getting to California

2. Chapter Objectives Section 3: The Policies of Prosperity • Explain Andrew Mellon’s economic strategies for maintaining prosperity.  • Describe how the United States remained involved in world affairs without joining the League of Nations. Click the mouse button or press the Space Bar to display the information. Intro 4

3. Promoting Prosperity • Andrew Mellon, named secretary of treasury by President Harding, reduced government spending and cut the federal budget. • The federal debt was reduced by $7 billion between 1921 and 1929. (pages 521–522) Click the mouse button or press the Space Bar to display the information. Section 3-5

4. Promoting Prosperity • Secretary Mellon applied the idea of supply-side economics to reduce taxes. • This idea suggested that lower taxes would allow businesses and consumers to spend and invest their extra money, resulting in economic growth. • In the end, the government would collect more taxes at a lower rate. (pages 521–522) Click the mouse button or press the Space Bar to display the information. Section 3-5

5. Trade and Arms Control • By the 1920s, the United States was the dominant economic power in the world. • Allies owed the U.S. billions of dollars in war debts. • Also, the U.S. national income was far greater than that of Britain, Germany, France, and Japan combined. • Many Americans favored isolationism rather than involvement in international politics and issues. (pages 522–524) Click the mouse button or press the Space Bar to display the information. Section 3-9

6. Trade and Arms Control(cont.) • Americans wanted to be left alone to pursue prosperity. • The United States, however, was too powerful and interconnected in international affairs to remain isolated. (pages 522–524) Click the mouse button or press the Space Bar to display the information. Section 3-10

7. Trade and Arms Control(cont.) • Other countries felt the United States should help with the war’s financial debt. • The United States government disagreed, arguing that the Allies had gained new territory and received reparations, or huge cash payments that Germany paid as punishment for starting the war. (pages 522–524) Click the mouse button or press the Space Bar to display the information. Section 3-10

8. Trade and Arms Control(cont.) • Reparations crippled the German economy. • As a result, Charles G. Dawes, an American diplomat and banker, negotiated an agreement–the Dawes Plan–with France, Britain, and Germany by which American banks would make loans to Germany so they could meet their reparation payments. • France and Britain agreed to accept less reparations and pay more on their war debts. (pages 522–524) Click the mouse button or press the Space Bar to display the information. Section 3-11

9. Trade and Arms Control(cont.) • The Washington Conference held in 1921 invited countries to discuss the ongoing post-war naval arms race. • Secretary of State Charles Evans Hughes proposed a 10-year moratorium, or pause, on the construction of major new warships. (pages 522–524) Click the mouse button or press the Space Bar to display the information. Section 3-12

10. Trade and Arms Control(cont.) • The conference did nothing to limit land forces. • Japan was angry that the conference required Japan to keep a smaller navy than the United States and Great Britain. A battleship ratio was achieved through this ratio:US Britain Japan France Italy 5 5 3 1.67 1.67 Japan got a guarantee that the US and Britain would stop fortifying their Far East territories [including the Philippines]. Loophole  no restrictions on small warships (pages 522–524) Click the mouse button or press the Space Bar to display the information. Section 3-12

11. Trade and Arms Control(cont.) • The Kellogg-Briand Pact was a treaty that outlawed war. • By signing the treaty, countries agreed to stop war and settle all disputes in a peaceful way. • On August 27, 1928, the United States and 14 other nations signed it, and eventually 62 nations ratified it. • The treaty had no binding force, but it was hailed as a victory. (pages 522–524) Click the mouse button or press the Space Bar to display the information. Section 3-13

12. The Tomb of the Unknown Soldier On March 4, 1921, Congress approved the burial of an unidentified World War I soldier in Arlington National Cemetery on a hill that overlooks Washington, D.C. This burial site, which was dedicated on November 11, 1921, is called the Tomb of the Unknown Soldier. In 1958 two unknown soldiers from World War II and the Korean War were buried alongside the original unknown soldier. In 1984 a Vietnam War soldier was added. On the side of the original tomb are inscribed the words: “Here rests in honored glory an American soldier known but to God.” The Tomb is guarded year-round, day and night, regardless of weather. The identities of the three other soldiers buried in the Tomb of the Unknown Soldier are, in fact, unknown. In 1998, however, DNA analysis allowed the Vietnam War soldier buried there to be identified. He is U.S. Air Force First Lieutenant Michael Joseph Blassie. F/F/F 3-Fact

13. Chapter Objectives Section 1: Causes of the Depression • Describe the characteristics of the 1920s stock market. • Identify the causes of the Great Depression. Click the mouse button or press the Space Bar to display the information. Intro 2

14. The Election of 1928 • Herbert Hoover (R) former head of the Food Administration and Secretary of Commerce • Alfred E. Smith (D) four-time governor of New York and the first Roman Catholic to be nominated for president. (pages 530–531) Click the mouse button or press the Space Bar to display the information. Section 1-5

15. The Election of 1928 • The issue of Prohibition played a major role in the campaign. • Hoover favored a ban on liquor sales. • Smith opposed the ban. (pages 530–531) Click the mouse button or press the Space Bar to display the information. Section 1-5

16. The Election of 1928(cont.) • Religious differences between the candidates had a major effect on the campaign. • The Catholic issue led to a smear campaign against Smith. (pages 530–531) Click the mouse button or press the Space Bar to display the information. Click the mouse button or press the Space Bar to display the information. Section 1-6

17. The Election of 1928(cont.) • The Republicans took full credit for the prosperity of the 1920s, and Herbert Hoover easily won the 1928 election by a landslide. (pages 530–531) Click the mouse button or press the Space Bar to display the information. Click the mouse button or press the Space Bar to display the information. Section 1-6

18. The Long Bull Market • The stock market was established as a system for buying and selling shares of companies. (pages 531–532) Click the mouse button or press the Space Bar to display the information. Section 1-8

19. The Long Bull Market • A long period of rising stock prices is known as a bull market. • Prosperous times during the 1920s caused many Americans to invest heavily in the stock market. (pages 531–532) Click the mouse button or press the Space Bar to display the information. Section 1-8

20. The Long Bull Market • A normal business cycle has highs (peak) and lows (trough). • To keep it steady, neither should last too long. (pages 531–532) Click the mouse button or press the Space Bar to display the information. Section 1-8

21. The Long Bull Market(cont.) • As the bull market continued to go up, many investors bought stocks on margin, making a small cash down payment. (pages 531–532) Click the mouse button or press the Space Bar to display the information. Section 1-9

22. The Long Bull Market(cont.) • This was considered safe as long as stock prices continued to rise. • If the stock began to fall, the broker could issue a margin call demanding that the investor repay the loan immediately. (pages 531–532) Click the mouse button or press the Space Bar to display the information. Section 1-9

23. The Long Bull Market(cont.) • In the late 1920s, new investors bid prices up without looking at a company’s earnings and profits. • Speculation occurred when investors bet on the market climbing and bought whatever stock they could in an effort to make a quick profit. (pages 531–532) Click the mouse button or press the Space Bar to display the information. Section 1-10