4
SECTION
Section
Step-by-Step Instruction
Helpful Inventions
“
Shall the men work—or shall you? . . . Back
of every great step in woman’s progress from
a drudge to a free citizen has been some laborsaving invention.
Review and Preview
”
Students have read about the impact of
jazz. Now they will learn about how the
economy affected American culture.
—Electric clothes washer
advertisement, 1924
!
Washing machine advertisement
The Economy of the 1920s
Section Focus Question
What economic problems threatened the economic boom of the
1920s?
Before you begin the lesson for the day,
write the Section Focus Question on the
board. (Lesson focus: People were overspending through installment buying and buying
stocks on margin.)
Prepare to Read
Build Background
Knowledge
■
• Explain how rising stock prices encouraged
many to borrow money to invest in the stock
market.
• Identify groups that did not profit from the
prosperity of the 1920s.
• Describe the election of 1928 and Herbert
Hoover’s victory.
Reading Skill
L2
Remind students that the policies of Harding and Coolidge favored big businesses.
Ask students how this might affect the
economy. (Possible answer: Helping businesses would benefit the economy because they
could afford to employ more workers, which
gives people more money to spend, which
increases demand.)
Set a Purpose
Objectives
• Describe the causes and effects of the
industrial boom that occurred in the 1920s.
Summarize a Passage Combine the skills
you practiced in Sections 1 through 3 as you read
Section 4. Pause after each major portion of text.
Summarize the main ideas that fall under the major
heading. Remember to paraphrase in your own words
and to include all the important ideas.
Key Terms
installment buying
bull market
buying on margin
L2
Read each statement in the Reading
Readiness Guide aloud. Ask students to
mark the statements as True or False.
Teaching Resources, Unit 7,
Reading Readiness Guide, p. 74
■
Have students discuss the statements in
pairs or groups of four, then mark the
worksheets again. Use the Numbered
Heads participation strategy (TE, p. T24)
to call on students to share their group’s
perspectives. The students will return to
these worksheets later.
752 Chapter 22
Why It Matters The cultural changes of the 1920s were
accompanied by a period of prosperity. The economic
boom produced fortunes for the wealthiest in society. But
many others were left out. Some key economic problems
lay hidden beneath the surface. By the end of the decade,
these problems would lead to a devastating stock market
crash and a long-lasting depression.
Section Focus Question: What economic problems
threatened the economic boom of the 1920s?
Industrial Growth
The end of World War I was followed by a severe recession in agriculture and industry. For industry, that downturn did not last long. Industrial production recovered, and
from 1922 to 1928 it climbed 70 percent. Many companies
successfully switched from producing military goods to
producing consumer goods. The market was filled with
refrigerators, radios, and cars.
As more goods came to market, prices dropped. Meanwhile, rising incomes gave consumers more to spend. To
encourage spending, businesses offered installment buying,
or buying on credit. In 1925, Americans got 75 percent of their
cars on the installment plan.
New forms of advertising surrounded customers with
images of things they should consume. Chain stores and
mail-order catalogs made it easier for people outside of major
cities to buy these goods. A new consumer culture arose.
Middle-class women were especially affected by these
changes. Many of the new electric appliances were designed
to appeal to the American homemaker. Vacuum cleaners,
toasters, washing machines, and refrigerators all lightened
the household workload.
752 Chapter 22 The Roaring Twenties
Differentiated Instruction
L1 English Language Learners
L1 Less Proficient Readers
Make a Chart Assist students with the
section content by drawing a chart on the
board with three columns and three rows.
Title the last two columns “Cause” and
“Effect.” Title the last two rows “Industrial
L1 Special Needs
Growth” and “Rising Stock Prices.” Read
the section with students, stopping to fill
in the chart after each paragraph. Have
students make a copy of the completed
chart to use as a study aid.
Government policies helped boost the economy. High tariffs on
imports kept out goods that might compete with domestic products.
Taxes on the wealthy were cut to encourage greater spending.
These measures did stimulate the economy. But they also helped
Americans develop a recklessness about spending. In 1928, when
Ford announced its new Model A, half a million people made a down
payment on the car without even having seen it.
Teach
Industrial Growth
A Booming Stock
Market
What factors caused an increase in consumer
spending?
pp. 752–753
Instruction
A Booming Stock Market
■
With a strong economy, more people chose to invest in the stock
market. Many people could now afford to purchase stocks, or shares
of companies. With money pouring into stocks, stock values kept
rising. A period of rising stock prices is called a bull market.
Stocks were so profitable that many people began buying on
margin—borrowing money in order to buy stocks. The investor put
down a portion of a stock’s cost and paid the rest later with the profits
earned from selling the stock. So long as the market continued to rise,
the investor had no problem paying the loan back.
Many Americans grew wealthy buying and selling stocks. Newspapers were filled with stories of investors who accumulated
fortunes. However, by 1928, some economists began to worry. High
stock prices seemed to have little to do with the actual value of the
company that issued them. A few experts warned that the stock
market was overvalued. But investors mostly ignored the warnings.
this section, preteach the High-Use
Words accumulate and participate,
using the strategy on TE p. T21.
Key Terms Have students complete the
See It–Remember It chart for the Key
Terms in this chapter.
■
Have students read Industrial Growth
and A Booming Stock Market. using the
Oral Cloze strategy (TE, p. T22).
■
Ask: What is installment buying?
(using credit to purchase items)
■
Show the History Interactive transparency Buying Stocks on Margin. Ask:
Why do you think so many investors
were willing to take out loans on
stocks? (Since the market continued to rise,
many investors didn’t have problems paying
back the loans.)
Vocabulary Builder
accumulate (uh KYOOM yoo layt)
v. to slowly collect; to increase in
amount over time
Buying Stocks
on Margin
Visit: PHSchool.com
Web Code: mvl-7224
Buying Stocks
on Margin
A sharp drop in the stock
market is alarming news to
investors who have bought
stock on margin. Critical
Thinking: Identify Costs
How might the practice of
buying stock on margin
turn a small drop in stock
prices into a larger and
more prolonged decline?
Investor
buys stock
on margin
Investor pays
for part of the
stock and takes
out a loan
from a broker
for the rest.
L2
Vocabulary Builder Before teaching
Stock Price Rises
Color Transparencies, Buying Stocks on
Margin
■
Investor pays off the
margin loan and earns
a profit.
Have students complete the worksheet
Banks in the 1920s.
Teaching Resources, Unit 7,
Banks in the 1920s, p. 78
Independent Practice
Stock Price Falls
Investor must put more
money into the margin
account, or sell stock,
losing part or all of the
original investment.
Section 4 The Economy of the 1920s 753
Have students begin to fill in the Study
Guide for this section.
Monitor Progress
■
As students complete the Notetaking
Study Guide, circulate to make sure students understand the new ways of purchasing that came about in the 1920s.
Provide assistance as needed.
Use the information below to teach students this section’s high-use words.
High-Use Word
Definition and Sample Sentence
accumulate, p. 753 v. to slowly collect; to increase in amount over time
As losses mounted, investors accumulated many debts.
participate, p. 754 v. to take part in; to share in an activity
Native Americans, African Americans, and women could not
participate in the voting process.
Answers
Lower prices, higher
incomes, installment buying, and advertising increased consumer spending.
Identify Costs Buying stock on margin
could lead to a prolonged decline because
everyone may become desperate to sell,
which would lower prices further.
Chapter 22 753
Signs of Trouble
The Election of 1928
Summarize a Passage
Use what you have
learned in this chapter to
summarize the text under the
heading “A Booming Stock
Market.”
pp. 754–755
Instruction
L2
■
Have students read Signs of Trouble
and The Election of 1928. Remind students to answer the reading Checkpoint
question.
■
Ask: Did everyone benefit from 1920s
prosperity? (No, farmers and workers had
hard times.)
■
Display the transparency The Election of
1928. Discuss with students the effect of
the Electoral College system on presidential elections.
Why did rising stock prices encourage people to
gamble on the stock market?
Signs of Trouble
Vocabulary Builder
participate (pahr TIHS ah payt)
v. to take part in; to share in an
activity
Color Transparencies, The Election of 1928
Independent Practice
Have students continue filling in the Study
Guide for this section.
Monitor Progress
■
As students complete the Notetaking
Study Guide, circulate to make sure students understand the reasons for the
ups and downs of the economy. Provide
assistance as needed.
■
Tell students to fill in the last column of
the Reading Readiness Guide. Probe for
what they learned that confirms or
invalidates each statement.
■
Have students go back to their Word
Knowledge Rating Form. Rerate their
word knowledge and complete the last
column with an example.
They preferred to listen to predictions like this one spoken by
Irwin Fisher, a professor of economics in 1929: “The nation is
marching along a permanently high plateau of prosperity.”
However, most people at the time were far from prosperous. The
wealthiest Americans made up about 5 percent of the population.
Most people just worked hard to make ends meet.
There were other signs of potential trouble, too. In fact, for many
Americans, the 1920s were years of poverty rather than prosperity.
Farmers Farmers were among the groups that did not participate
in the good times. About one fifth of Americans made their living on
the land and many of them lived in serious poverty.
There were several reasons for the agricultural depression. American farmers grew far more crops than the American public could
consume. Before World War I, farmers had sold their surplus abroad.
However, demand for American farm products declined after the
war, because many nations were too poor to purchase them.
High debt was another reason for rural poverty. In the good years
before the world war, farmers had taken out loans to buy new lands
and equipment. After the war, though, sales went down. Many
farmers were unable to pay off their debts.
Workers The 1920s were years of mixed results for American
Farmers in Trouble
Drought and erosion contributed
to the troubles of farmers, who
made up one fifth of the
population. Critical Thinking:
Draw Conclusions Why might
bad times for farmers also be bad
for the American economy in
general?
workers. On the one hand, wages were rising. Companies also began
offering new benefits, such as pensions and paid vacations, in an
attempt to keep their workers from joining unions.
On the other hand, unemployment was high. During the 1920s, it
was about 5 percent of the workforce each year. Those who had jobs
found that their jobs were changing. The assembly line system was
squeezing out skilled labor. Each step had been reduced to its
simplest methods. Unskilled workers could handle the work—and
they received lower pay.
Why were farmers left out of the prosperity of the
1920s?
Teaching Resources, Unit 7,
Reading Readiness Guide, p. 74; Word
Knowledge Rating Form, p. 70
Answers
Reading Skill Possible answer:
Because the stock market continued to rise,
many Americans bought on the margin.
Many people grew wealthy buying and
selling stocks, yet a few experts warned
that the stock market was overvalued.
They thought it was a quick
way to make an easy profit.
Draw Conclusions Possible answer: The
U.S. economy depended heavily on the
success of agriculture.
They struggled because of
overproduction, high debt, and a decline in
foreign demand following the war.
754 Chapter 22
754
Differentiated Instruction
L3 Advanced Readers
L3 Gifted and Talented
Write a Journal Entry Have students
choose one of the groups discussed in this
section (Stock investors, business owners,
farmers, and workers). Ask students to write
a series of journal entries from the point of
view of a person from that group. Have
them share that person’s experiences and
feelings about life in the 1920s. Ask students to read their journal entries to the
class.
The Election of 1928
Assess and Reteach
The Republicans had held the presidency throughout the 1920s,
and they claimed responsibility for the decade’s prosperity. For their
candidate in the 1928 presidential election, they chose Secretary of
Commerce Herbert Hoover. The Democrats nominated New York
Governor Alfred E. Smith.
The campaign highlighted some of the continuing divisions in
American society. Smith was the first Catholic ever to run for President, and religion became one of the issues. Immigrants, Catholics,
and urban residents tended to support Smith. Rural residents and
Protestants tended to support Hoover, a Quaker born in Iowa.
The economy was another major issue. Hoover pledged to
continue the policies he credited for prosperity. He campaigned on
the slogan “a chicken in every pot and a car in every garage.” He said
the nation was near to “the final triumph over poverty.”
Although Alfred Smith won the largest cities, he lost every state
but Massachusetts and six Deep South states. Hoover won with
special strength in rural areas. Herbert Hoover entered the White
House in 1929 with great expectations for a prosperous future.
Assess Progress
Teaching Resources, Section
Quiz, p. 84
To further assess student understanding,
use the Progress Monitoring Transparency.
Progress Monitoring Transparencies,
Chapter 22, Section 4
Reteach
Section 4
Comprehension
and Critical Thinking
1. (a) List What were the reasons
the economy, after a short slump,
boomed following World War I?
(b) Identify Economic
Benefits Explain how high tariffs and low taxes boosted the
economy during the 1920s.
2. (a) Recall Which groups of
Americans did not benefit from
the prosperity of the 1920s?
(b) Synthesize Information
Why might some farmers have
felt government support was
necessary at this time?
Hoover campaign plugs
Writing
Reading Skill
Interactive Reading and
Notetaking Study Guide, Chapter 22,
Section 4 (Adapted Version also available.)
Extend
For: Self-test with instant help
Visit: PHSchool.com
Web Code: mva-7224
Check Your Progress
L1
If students need more instruction, have
them read this section in the Interactive
Reading and Notetaking Study Guide and
complete the accompanying question.
Among what groups was Hoover strong?
Looking Back and Ahead A widespread prosperity and
sweeping changes in society made the 1920s an exciting time. Within
months of Hoover’s election, however, a stock market crash plunged
the nation into a great depression that spread misery across the land.
L2
Have students complete Check Your
Progress. Administer the Section Quiz.
7. Revise the following paragraph by
putting the sentences in logical
order: In the mid-1920s, however,
reduced taxes and extended credit
encouraged consumer spending.
By 1929, the economy had grown
Key Terms
to the point of being overheated.
Complete each of the following
In the early 1920s the economy
sentences so that the second part
declined, partly as a result of
further explains the first part and
World War I. The U.S. economy
clearly shows your understanding of
improved a great deal from the
the key term.
beginning to the end of the 1920s.
4. To purchase a car, a person can
The war had badly weakened
turn to installment buying, _____.
European economies, and the
5. People make money during a bull
overseas market for American
market, _____.
goods shrank.
6. In order to purchase even more
stock in the 1920s, people began
buying on margin, _____.
3. Summarize a Passage Reread
and then summarize the text
under the heading “Signs of
Trouble.”
L3
To help students expand their understanding of the effects of buying on margin, have
them complete the History Interactive
activity online. Provide students with the
Web Code below.
Web Code: mvp-0155
Progress Monitoring Online
Students may check their comprehension of this section by completing the
Progress Monitoring Online graphic
organizer and self-quiz.
Answer
Hoover was strong with
Protestants and rural residents.
Section 4 The Economy of the 1920s 755
Section
4 Check Your Progress
1. (a) Possible answers: Companies suc-
cessfully switched from producing military goods to consumer goods; high tariffs on imported goods and low taxes
stimulated the domestic economy.
(b) High tariffs kept out foreign goods,
allowing domestic companies to make
goods and employ thousands of workers. Low taxes allowed people to keep
and spend more of their money, which
helped build businesses.
2. (a) Many American farmers and workers
did not benefit from the prosperity of the
1920s.
(b) Possible answer: Many farmers might
have wanted support because many nations
were too poor to buy their products.
3. Answers will vary, but should demonstrate
an ability to summarize as well as an understanding of the key points of the section.
4. or buying on credit.
5. or a period of rising stock prices.
6. or borrowing money in order to buy stock.
7. The U.S. economy improved a great
deal from the beginning to the end of
the 1920s. In the early 1920s the economy declined, partly as a result of World
War I. The war had badly weakened
European economies, and so the overseas market for American goods shrank.
In the mid-1920s, however, reduced
taxes and extended credit encouraged
consumer spending. By 1929, the economy had grown to the point of being
overheated.
Chapter 22 Section 4 755