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The Business of Government .
EQ 1: How did domestic and foreign policy change direction under Harding and Coolidge?
EQ2: How did the booming economy of the 1920’s lead to changes in American life?
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Return to Normalcy
• Warren G. Harding• called for a return to “normalcy”• this meant isolationism and laissez-
faire• critics said that this basically wiped
out the reforms of the Progressive Era
• Why would this concern some Americans?
• Harding died of a heart attack halfway through his presidency
• criticized for allowing his poker buddies to rip off the country
What did this mean after the Great War?
What is isolationism and laissez-faire?
(1921 – 1923)
2
Return to Normalcy
• Andrew Mellon, Sec. of the Treasury• argued that lower taxes would
stimulate business investment which creates jobs
• cut the income tax rates• reduced national debt
Can you explain the reasoning for doing so? Would these ideas still be popular today?
3
Return to Normalcy
• Calvin Coolidge (1923 – 1929)• “Silent Cal” was seen as
honest and frugal • he refused to spend
government money to buy farm surpluses
Why would he refuse to help farmers? Is it the Government’s business to help people?
“The chief business of the American people is business.”
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Isolationism
• US refused to join the League of Nations• the US raised its taxes on trade
• Washington Naval Disarmament Conference, 1921• reduced the sizes of the US, Japanese, and
British navies in the Pacific• Kellogg-Briand Pact, 1928
• 62 nations signed a pledge to outlaw war
How did these acts symbolize the withdrawal of America from World Affairs?
5
Isolationism
• Dawes Plan, 1924• the US loaned money to
Germany so it could pay reparations to Britain and France
• Britain and France then paid the US money they had borrowed during WWI
Can you predict any problems that will arise from such a relationship? 6
The Automobile Drives Prosperity
• Henry Ford (1863 – 1947)• combined mass production
with high wages• tried to pay his workers
enough that they could buy his cars
“I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be low in price that no man making a good salary will be unable to own one-and enjoy with his family the blessing of hours of pleasure in God's great open spaces.” 7
The Automobile Drives Prosperity
• The Model T, 1908• Ford marketed this car to
the middle class• the car cost $850 in 1908
but the price dropped to $295 by 1927
• car ownership went from 10% of American families in 1919 to 56% in 1927
• over 15 million were produced• "Any customer can have a car
painted any color that he wants so long as it is black."
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The Automobile Drives Prosperity
• How did the automobile change the nation?1. stimulated economic growth
• resources, roads, service stations, diners, motels, insurance
2. freedom of movement• unlike the train, you could go wherever you wanted
whenever you wanted3. helped create “urban sprawl”
• spread cities out to the suburbs
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Mass Production
Assembly Line• techniques to produce goods
in large numbers were popularized by Henry Ford
• standardized parts and the assembly line lowered the cost of production
• provided lots of jobs that required little expertise
• made things affordable that had been too expensive for average people
How did this contribute to the prosperity of the 1920s? 11
A Bustling Economy
• Consumerism• money saved during WWI, was
now spent on new, affordable goods
• vacuum cleaner, electric iron, electric washing machines, radios, refrigerators
• Advertising• used scientific techniques to
play on peoples desires and fears
• Installment Buying (Credit)• people could own products that
they otherwise could not afford
How did these change the way people spend money?
Listerine's new ads featured forlorn young women and men, eager for marriage but turned off by their mate's rotten breath. "Can I be happy with him in spite of that?" one maiden asked herself. In just seven years, the company's revenues rose from $115,000 to more than $8 million. 12
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The Stock Market
Bull Market• a period of rising stock
prices• 4 million Americans owned
stock by 1929• economists claimed that
the value of stocks would always rise
Can you explain why Americans were so optimistic in this time? 15
The Stock Market
Buying on Margin• the buyer paid 10% down
and had months to pay the rest
• the stock was the collateral for the loan
• people figured that by the time the money was due they could sell the stock for a profit
How did this allow more people to buy stock?
People paid 10% of stock price, and could “make payments” on the rest, causing them to buy more than they could afford.
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