Chapter 39
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Chapter 39. The New Era: When America Was a Business 1923–1929. The Coolidge Years. Calvin Coolidge “Silent Cal,” impeccably proper, even dreary Was an able speech giver Willing to let business take lead Cleaned house after Harding scandals 1824 Republicans nominate Coolidge

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Chapter 39

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Chapter 39

Chapter 39

The New Era:

When America Was a Business

1923–1929


The coolidge years

The Coolidge Years

  • Calvin Coolidge

    • “Silent Cal,” impeccably proper, even dreary

    • Was an able speech giver

    • Willing to let business take lead

    • Cleaned house after Harding scandals

    • 1824 Republicans nominate Coolidge

    • Democrats split, nominated John Davis

    • Coolidge won easily

  • Andrew Mellon’s tax policies

    • Says growth depends on capitalists reinvesting

    • Lowers taxes for rich

    • High Fordney-McCumber tariff, regressive taxes

    • Believes investments will “trickle down”


The coolidge years cont d

The Coolidge Years (cont.’d)

  • Foreign Policy

    • German reparation payments to France, Britain

    • France, Britain repay loans to U.S.

    • Creates international financial strain

    • U.S. agrees to reschedule payments – Dawes plan


Prosperity and business culture

Prosperity and Business Culture

  • Prosperity continues through 1920s

    • Republicans control Congress

    • Democrats strong in South and a few cities

  • Election of 1928

    • Republicans nominate Herbert Hoover

    • Democrats nominate Alfred E. Smith

    • Smith hurt by Catholicism; Prohibition

    • Hoover wins easily


Prosperity and business culture cont d

Prosperity and Business Culture (cont.’d)

  • Productivity soaring

    • Work force showing little growth

    • Wages do not keep up with prices

    • Most Americans satisfied

  • Buy now, pay later

    • Americans typically borrow for homes or to create wealth

    • 1920s Americans buy consumer goods on installment

    • Level of consumer debt rising rapidly

  • Advertising

    • At first advertising just announcements

    • Business learns value of repetition

    • 1920s advertisers use psychology

    • Exploit anxieties, use sexual titillation


Prosperity and business culture cont d1

Prosperity and Business Culture (cont.’d)

  • Chain stores

    • More retailing on nationwide basis

    • Chain stores undersell small businesses

    • Vertical integration

  • Limits of prosperity

    • Buying cannot go on forever

    • Not all Americans share good times

    • Farmers hurting economically

    • Many rural minorities hurting

  • Business culture

    • Business service clubs

    • Bruce Barton, The Man Nobody Knows

    • John Jacob Raskob: everyone should invest

    • New interest in get-rich-quick schemes


Get rich quick

Get Rich Quick

  • Florida land boom

    • Buy land expecting values to rise

    • Boom follows as prices skyrocket

    • Hurricane triggers crash

  • The Bull Market

    • 1927 stock prices soar

    • More people invest

    • Prices have little relation to value

    • Federal Reserve lowers interest rates

  • Buying on margin

    • Middle class invests in stock market

    • Investors buy “on margin”

    • Put down as little as 10% of price

    • Expect price to continue to rise


Get rich quick cont d

Get Rich Quick (cont.’d)

  • Stock Market Crash

    • September 3, 1929 prices peak, then drop

    • Prices unstable for month

    • October 24 values collapse

    • October 29 crash worsens

    • Crash does not cause depression

    • Crash does accelerate depression

    • Middle class loses savings, banks close

    • Businesses close, unemployment soars


Discussion questions

Discussion Questions

  • What sort of president was Calvin Coolidge? How did he deal with the scandals of the previous administration?

  • What was the Kellogg-Briand Treaty? What was the intrinsic fault with its premise and what does it say about this period of history?

  • Examine the prosperity of the 1920s. What factors drove it and what potential problems dwelled in the backdrop?

  • What caused the stock market to crash in 1929? What effect did it have on the U.S. and world economies?


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