Prosperity and the

Stock Market

TradeTHE DAWES PLAN

US

GermanyEngland & France

1. US loans Germany

money to pay

reparations

2. Germany pays back allies on agreed upon lower rate

3. Allie

s pay

bac

k

US with

mon

ey

from

Ger

man

y

US needs strong nations with which to

tradeTRADING NATIONS ARE

PEACEFUL NATIONS

Business and Advertising

• President Coolidge cut regulations on businesses

• Americans’ incomes rose• People began to buy refrigerators,

radios, vacuums, and other appliances• Businesses began to advertise their

products• “The business of America is business.”• Government followed a strict laissez-

faire policy toward business

Ford Motor Company• The Ford Motor Company was incorporated

in 1903 with Henry Ford as vice-president and chief engineer.

• The infant company produced only a few cars a day at the Ford factory on Mack Avenue in Detroit. Groups of two or three men worked on each car from components made to order by other companies.

• Henry Ford realized his dream of producing an automobile that was reasonably priced, reliable, and efficient with the introduction of the Model T in 1908.

• In 1910 the company opened a large factory at Highland Park, Michigan.

• By 1918, half of all cars in America were Model Ts.

Ford Factory• Henry Ford was able to sell cars cheaply because they were

mass-produced and standardized on an assembly line.

• Car-making used up 20% of America’s steel, 80% of her rubber, 75 % of her plate glass, and 65% of her leather.

The Model T• As Henry Ford said “ You can paint it any color you like, as

long as it is black.”• The early Model Ts actually did come in a variety of colors,

but beginning in 1914 and for the next eleven years, the Model T would be sold in only one color: black.

• The reason for this was the black enamelused dried more quickly than other paintsand sped up production.

• Consumers were not offered a choice of colors again until 1926, due in part to slumping sales.

• They called it the car for Everyman

• Henry Ford himself called it a car for the “great multitude”

• It was functional and simple like your sewing machine or cast-iron stove.

• You could learn to drive it in less than a day…

• And you could paint it any color, so long as it was black.

• When Ford first conceived the Model T it took 13 hours to assemble.

• Within 5 years he was turning out a vehicle every 90 seconds.

• And of course, the real invention wasn’t the car… it was the assembly line that built it.

Buying on Credit• Installment Buying= Buying on

Credit (Buy now, pay later)• Demands for goods jumped,

but so did Americans’ debt“If we want anything, all we have to do is go and

buy it on credit. So that leaves us without any economic problems whatsoever, except that perhaps some day to have to pay for them.”

–Comedian Will Rogers

Soaring Stock Market• By the late 1920s, more

people were investing in the stock market

• People became rich overnight

• Bull Market: Period of rapidly increasing stock prices

• Prices of stocks rose more quickly than the value of the companies themselves

• Buying on Margin: Usinga small amount of money to control a large amount of stock.