Economy of the 1920s The Calm before the Storm Mr. Mizak Modern American History.
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Transcript of Economy of the 1920s The Calm before the Storm Mr. Mizak Modern American History.
![Page 1: Economy of the 1920s The Calm before the Storm Mr. Mizak Modern American History.](https://reader035.fdocuments.net/reader035/viewer/2022062314/56649f325503460f94c4e3ec/html5/thumbnails/1.jpg)
Economy of the 1920sThe Calm before the Storm
Mr. MizakModern American History
![Page 2: Economy of the 1920s The Calm before the Storm Mr. Mizak Modern American History.](https://reader035.fdocuments.net/reader035/viewer/2022062314/56649f325503460f94c4e3ec/html5/thumbnails/2.jpg)
The Economy Appeared Healthy
• 1925 the market value of all stocks was $27 billion
• For the next few years stocks soared– 1928 stock values rose by >11 billion
• This led to high confidence in the economy• Belief that “everybody ought to be rich”– Welfare capitalism– Similarity to today?
![Page 3: Economy of the 1920s The Calm before the Storm Mr. Mizak Modern American History.](https://reader035.fdocuments.net/reader035/viewer/2022062314/56649f325503460f94c4e3ec/html5/thumbnails/3.jpg)
Signs of Danger
• Despite the prosperity on Wall Street, it was the rich who got richer
• Small % of the nation held the majority of the wealth
• .1% of the population held 34% of the nation’s wealth
• Many Americans got used to buying on credit– Is this still common today?
![Page 4: Economy of the 1920s The Calm before the Storm Mr. Mizak Modern American History.](https://reader035.fdocuments.net/reader035/viewer/2022062314/56649f325503460f94c4e3ec/html5/thumbnails/4.jpg)
Playing the Stock Market
• Before the 1920s only the rich played the stock market.– Due to the prosperity of the 1920s, many middle-
low class individuals started to invest• Terms to know (define them in your notes)– Speculation– Buying on margin
![Page 5: Economy of the 1920s The Calm before the Storm Mr. Mizak Modern American History.](https://reader035.fdocuments.net/reader035/viewer/2022062314/56649f325503460f94c4e3ec/html5/thumbnails/5.jpg)
Lets Take a Look at the Stock Market
![Page 6: Economy of the 1920s The Calm before the Storm Mr. Mizak Modern American History.](https://reader035.fdocuments.net/reader035/viewer/2022062314/56649f325503460f94c4e3ec/html5/thumbnails/6.jpg)
Stocks
• Corporations are formed by selling shares of stock.
• By selling stock a company obtains funds for use in expanding business and (hopefully) making a larger profit
• Shares entitle the buyer to a certain part of the future profits of the company
![Page 7: Economy of the 1920s The Calm before the Storm Mr. Mizak Modern American History.](https://reader035.fdocuments.net/reader035/viewer/2022062314/56649f325503460f94c4e3ec/html5/thumbnails/7.jpg)
Stock Returns
• On stocks money is made in two ways• 1) Dividends- money given to a stockholder on
the amount of money originally invested in the company
• 2) Individual sells the stock for more than they paid for it.
![Page 8: Economy of the 1920s The Calm before the Storm Mr. Mizak Modern American History.](https://reader035.fdocuments.net/reader035/viewer/2022062314/56649f325503460f94c4e3ec/html5/thumbnails/8.jpg)
Bonds
• Bond- A certificate issued by a company or the government in exchange for borrowed money.
• Bonds pay a stated rate of interest over a stated period of time
• Buying bonds does not make a bondholder part owner of the company