Objective: To analyze the effect the car had on U.S. society. 1927 Ford Model T
A Booming Economy: The 1920 s Income increases Boom Cycle People purchase more goods Companies expand and hire more people Companies earn higher profits
Exercise Your Brain! Partner 1 explain to partner 2 how the boom cycle of the automobile industry works. Listen for the switch. Income increases Boom Cycle Companies expand and higher more people People purchase more goods Companies earn higher profits
Henry Ford used assembly lines to produce cars.
The efficiency of the assembly line helped to decrease car prices. Ex.) Model-T 1909 - $850 1916 - $360 1924 - $290
Instead of meeting on the front porch under the watchful eyes of adults, our young people are now traveling to the next town or city and spending long hours together in what are virtually private rooms on wheels.
Effects of the Car Industry steel rubber oil The following industries grew as a result of the booming car industry: construction (roads and bridges) housing (as the suburbs grew) paint glass
Seat partner 2 explain to seat partner 1 how at least three other industries were affected by the growth of the automobile industry. Listen for the switch. Exercise Your Brain
* Employment and standards of living increased. * As World War I ended, technology focused on consumer goods. Ex) radios, washing machines, telephones, and cars * Increased wages caused an increase in buying power. 1925 RCA Radiola Super VIII
Do Now On a scrap piece of paper, explain three effects the mass production of the automobile had on society.
Objective: To examine the methods used to increase the economic boom in America.
New Goods for Sale In the 1920 s, people began to purchase items they couldn t afford through the use of installment buying, or buying on credit. Installment buying increased the demand for goods, while consumer debt increased.
Advertising In the 1920 s business used advertising to convince consumers that they would be happier if they bought their product.
How does the stock market work? You buy 100 shares of stock of x $5.00 per share How much money have you invested? $500.00 Scenario #1 stock increases to $20 per share How much are your 100 shares of stock now worth? 100 shares of stock x $20.00 per share $2,000.00 How much profit have you made? $2,000.00 stock value - $500.00 initial investment $1,500.00 net profit
How does the stock market work? You buy 100 shares of stock of x $5.00 per share How much money have you invested? $500.00 Scenario #2 stock decreases to $1 per share How much are your 100 shares of stock now worth? 100 shares of stock x $1 per share $100.00 How much money have you lost? $100.00 stock value - $500.00 initial investment $400.00 net loss
Stocks Surge Millions of Americans invested in the bull market, becoming rich as stock prices rose. Many Americans borrow a portion of the money to buy stocks (Buying on Margin)
Buying Stocks on Margin: Scenario A Hello, sir. I would like to purchase 100 shares of stock in the Ford Motor Company. How much is it going to cost me? investor stock broker
Buying Stocks on Margin: Scenario A Well, Ford stock costs $10 per share. You want to buy 100 shares? Figure it out yourself, smartguy! investor stock broker
Buying Stocks on Margin: Scenario A Ummm 100 shares x $10 per share = $1,000.00 Oh, well. I only have $100. I can t afford 100 shares. investor stock broker
Buying Stocks on Margin: Scenario A No, problem! Just give me $100 and you can owe me the rest! investor stock broker
Buying Stocks on Margin: Scenario A Like, how much would that be? Let me think $1,000 worth of stock - $100 paid = $900 owed investor Alright, it s a deal!! stock broker
Buying Stocks on Margin: Scenario A Six months later, Ford stock doubles to $20 per share. My 100 shares are now worth... 100 shares x $20 per share $2,000 investor stock broker
Buying Stocks on Margin: Scenario A That s great! Now pay me the $900 you owe me! investor stock broker
Buying Stocks on Margin: Scenario A No problemo! It was a pleasure doing business with you! investor stock broker
Buying Stocks on Margin: Scenario A investor Now let s figure out how much money I made! $2,000 net worth - $900 owed $1,100 profit - $100 initial investment $1,000 net profit
Buying Stocks on Margin: Scenario B Six months later, Ford stock decreases to $1 per share. My 100 shares are now worth... 100 shares x $1 per share $100 investor stock broker
Buying Stocks on Margin: Scenario B Too bad, hotshot! You still owe me that $100 plus another $800! investor stock broker
Buying Stocks on Margin: Scenario B But I m broke! What am I going to do! investor stock broker
Buying Stocks on Margin: Scenario B I don t care what you do as long as you pay me back! investor stock broker
Some people began to buy stocks on margin, which is similar to installment buying. * Unquestioned faith in the bull market helped lead to the Great Depression!