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Hello class, today we are going to explain the economic situation after the First World War.

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I'm talking about the Roaring Twenties, in Spanish, Los Felices Años Veinte.

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In the following lessons, we are going to explain the economic contrast between the Roaring Twenties and the economic crisis that began in 1929.

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By the end of this talk, you will be familiar with the Roaring Twenties, because the economy from 1924 to 1929 went through a period which was called the Roaring Twenties, Los Felices Años Veinte.

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It was true that Europe benefited from this period, but to be honest, it was the United States which experienced the greatest progress.

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Why? Because at that moment, after the First World War, the United States became the top economic power.

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Why? What was the origin of that? Because at that moment, the United States gave a lot of loans to Germany.

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Remember that the economy after the First World War was in absolute ruin.

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For this reason, Germany at that moment was the loser of the war, and the Germans had to pay a lot of reparations to the winners, such as Great Britain and France.

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But the Germans were not able to pay all these debts and reparations, and for this reason, the British and the French, which took a lot of loans from the United States, were not able to pay all these loans back to the United States.

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For this reason, the United States had a brilliant idea in mind. They developed the Dose Plans. What does it mean, the Dose Plans?

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Those in the United States had the idea to give loans to Germany, and for this reason, Germany from that moment would be able to pay the reparations to Great Britain and France.

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And as a consequence, Great Britain and France paid the money back to the United States. With this brilliant idea, the United States became the top economic power in the world. They became a superpower based on three different pillars.

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The first one was the industrial development, which was possible thanks to new systems of production based on assembly lines, as we can see here in this image in a Ford factory.

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As a consequence of that, due to this new system of assembly lines, automobiles, vehicles could be mass produced, as we can see here in this image, and the owners of the companies earned more money.

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So the new systems of production based on assembly lines, such as Taylorism and Fordism, helped increase productivity and reduce costs. The rising workers' wages and advertising campaigns, together with bank loans, paved the way for an era of mass consumption.

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So this situation, as we might see here, here we have a chart based on the industrial production from 1922 to 1929.

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And we can see that the industrial production and the Dow Jones Industrial Average increased rapidly. The industrial production from 1925 to 1920 skyrocketed.

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It was true that when the crisis began, it plummeted, but this is another part of the story that I will explain in the following lesson. But it was true that due to industrial development, due to industrial production, the level, the increase in the industrial average was evident.

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So what was the second characteristic of this? So we are going to explain now the second characteristic, which explains why the United States became a superpower at that moment.

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The second pillar was the level of consumption. Because at that moment, at that moment in the United States, developed the advertising industry.

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And also together with the new purchase methods, such as new installment payment plans, la venta a plazos, and also due to the bank loans, préstamos de los bancos, everybody at that moment in the United States were buying on credit.

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Compraban a crédito. Because at that moment, it was set up a new mindset or mentality. And the motto was at that moment, for this reason, for this new mindset or mentality, buy now and pay later was the main motto.

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And also, it was linked with another mentality that thought that it was better to think, don't worry about the future, live the moment. So everybody, as we can see here in this ad from Coca-Cola, thought that it was better to live the moment to the last drop.

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Exactly. To enjoy the moment and don't think about the future. Everybody was buying without thinking that it was better to save money just in case an economic recession could start. As it happened, and I will explain that on the following lesson.

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And the third characteristic, the third pillar was the stock market investments. Because at that moment, another quick way to get money for individuals or companies and for banks was to buy shares in the market.

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I'm going to explain it again. Another quick way to get money at that moment for normal people or companies and for banks was buying shares, acciones de las empresas, de los bancos y de otras compañías, was buying shares in the market, en la bolsa, in the market.

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So as a consequence of that, the prices of the shares went up, and the economy was completely based on speculation. It was not natural, the economy.

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Millions of Americans at that moment, common people like you and me, millions of Americans were buying shares in the markets. They were buying shares or stocks in margin.

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What does it mean to buy on margin? To buy on margin means actually the purchase of a stock, when you buy a stock, with money that you have borrowed from your broker.

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It's an example of using leverage, which means using borrowed money, dinero prestado, to increase your potential profit.

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So as a consequence of that, as I said before many times, millions of Americans, common people, were in the market, they were buying stocks in margin, and as a consequence, the shares went up.

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So as a result of that, even more investors were borrowing money, and the whole economy was based on speculation. It was a bubble that could burst, as I'm going to explain also in the following lesson.

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Who was the man responsible for that? The man responsible for this situation was the President of the United States. Not only the President of the United States, obviously, but he was the main promoter. He created a system that favored that situation.

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The President of the United States at that moment was Coolidge, from 1923 to March 1929. And Coolidge, before being President of the United States, he used to be an investor in Wall Street.

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Actually, his main motto in life was business. And during his presidency, as an entrepreneur, as a man of a company, as a man of business, he made a close circle between politicians and banks, because they had the same goals in mind.

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And as a consequence of that, he created a government without supervision. He didn't supervise the men in Wall Street. So they were doing basically what they wanted, without control from the state.

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So, what was the main consequence of that? It was true that at the end, in the United States, it started an era of prosperity. Common people trusted the capitalist system, because at that moment they had a high standard of living.

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They were buying as many goods as they want. They were buying also services, and families in general were living carefree lives.

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So, it was a decade of prosperity, the Roaring Twenties, without doubt, where the American way of life and the values that underpin it, such as initiative, individual effort and success, guaranteed the wealth and well-being of its citizens.

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And it became also a model for the whole world, the American dream, the American way of life.

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So, this is the moment when the fashion industry developed, and the wild dances such as jazz and Charleston. It was also the beginning of the entertainment industry, in the theaters, cabarets and cinemas.

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Common people at that moment in the United States used to go to the movies, to the cinemas, three or four times per day. It was cheaper, and it was an easy way of living, but everything ended with the economic recession in 1929.

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But this is another story that I will explain in the following lesson. Thank you so much. Bye-bye.