Check out these amusing ads from the

1920s!

Don’t forget to be skimming your book @ home:

Reconstruction WW2

$$ More Money, More Problems $$

Installment buying: buying on credit• Buyers could take home a new fridge by putting a down

payment & each month they paid an installment until they paid the full price PLUS INTEREST

• “Buy Now, Pay Later” increased the demand for goods

$25,000 paid at once

VS$5,000 paid over 5 times

WHICH WOULD YOU RATHER DO?

Interest: monetary dues owed over time as a result of credit

$5,000 five times = $25,000 (w/interest = $30,000)

Soaring Stock Market• Boom of the 20s gave the stock market a giant boost• Corporations sold stocks: shares of ownership sold to

investors– Investors made or lost $$ depending on whether the

price of shares went up or down

Bull Market

• By late 20s: more people were investing in the stock market than ever– Stock prices rose so fast some people made fortunes overnight

(this encouraged more to buy)– Bull market: period of increased stock & rising stock prices

Margin System• Many people bought stocks on a margin system:– An investor would buy stock for as little as 10% down payment– The buyer held the stock until the price rose & then sold it at profit

– Margin buying worked as long as stock prices kept going up

This works for me…

Problems Rising

• In 1928 & 1929 – prices of many stocks rose faster than the value of the companies themselves– Experts warned that the bull market couldn’t last forever– Most investors ignored the warnings

Limited Role in World Affairs• After WW1, U.S. was world’s

leader in economic power

• Europeans expected U.S. to take a major role in world affairs

• Harding & Coolidge wanted to continue peace in Europe, however they didn’t want the job of KEEPING world peace

• Many Americans supported this return to pre-war isolationism

Latin America• During WW1 LA nations had been cut off from Europe– Result: U.S. trade/ investment in LA increased– Trade continued after war– U.S. limited its role abroad for fear that more involvement may

push the country into war again

Soviet Union

• Lenin is now the big cheese in Russia since the revolution• Lenin created the world’s first communist state (marx lenin)

– Communism: economic system in which all wealth & property is owned by the community as a whole

• U.S. refused to recognize Lenin’s government & disliked the idea of communism– Think…why?! What is U.S. built on?

• Post WW1 many people favored disarmament: a reduction in the armed forces & weapons of war

• Harding & Coolidge also supported peace efforts

Pursuing Peace

Pursuing Peace1928 – U.S. & 61 other nations signed the Kellogg-Briand Pact : a treaty outlawing war• Treaty had a fatal flaw in that it didn’t set up any means for

keeping peace• One nation could still use force against another without fear of

punishment

NOW:• Brainstorm…• You’ll have 5 minutes to write as many things as you can….• Imagine you’re giving someone a tour of your house• List the following per-room as you envision it:– Big pieces of furniture– Expensive artwork– Major appliances* this is a longer list*– Cars or other vehicles– Expensive technology (computers, TVs, laptops, etc…)**think you’re done? Make another lap! Inside/ outside/

basement/ attic, etc… **

WHO CAN LIST THE MOST???

Most likely, your parents bought most of these items in installments

On average (Lowes.com, autobytel.com, bestbuy.com) :- New refrigerator: $480-$9,000- New washer OR dryer: $300-$1,600- New TV: $80-$8,500- New car: $11,000 - $296,000- To install an appliance: $380- To refinish an appliance: $300- To repair an appliance: $200

Something to think about!