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2. The USA from prosperity to crisis
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Okay, so let's continue with the situation in Europe, in this case in the US, after the First World War. As we have seen, the situation in Europe is going to be bad, but in the US is going to be positive.
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After the First World War, the US is increasing the profits, is earning more money because they are selling all their products around the world. They are producing more industrial products and agricultural products than Europe.
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So Europe is becoming poorer while the U.S. is living a moment of prosperity.
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This period of time after the First World War is called this way, the Roaring Twenties.
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And in Spanish is Los Felices Años Veinte.
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And we are going to talk about Los Felices Años Veinte because it's the 20s from 1920 till 1929 with a crash.
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This is the period where not only the US but Europe is going to start increasing or they are going to start developing their economies.
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So they are going to start earning more money, moving more money and the social and working conditions are going to be better.
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So let's look first at the US.
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We are going to focus our attention on the US.
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So what is happening in the US?
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What is the characteristics of this Felices Años 20 related with the US and Europe, okay?
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So the thing is, it's going to be a period of economic growth.
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It's true what I said.
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So it's a moment when the economy is going to grow after the First World War.
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The US is giving loans to Europe in order to develop their industry and agriculture.
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The USA is the most powerful economic power in the world.
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So everything is positive.
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There is no war.
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there are treaties in order to avoid war okay the different countries have signed treaties in order
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to say okay we are not going to start another war like the first world war what we want is to live
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in peace and develop our economies so that's the point so what we are going to see is this felices
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or this roaring 20s are going to be a period of economic growth in general it means there is more
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money, they are going to produce more, the wages, it means the salaries, are going
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to be higher. Okay, so in the beginning the 20s are a positive period. Remember
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they end in 1929 with a crash, so they are not going to end very good. Okay, so
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why we are going to have this economic growth? Because of the technical
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innovations and the use of Fordism and Taylorism. We have explained these two
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concepts related to the second industrial revolution. So these two ways
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to produce, remember the assembly lines, remember to organize the production,
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is what is going to make us to increase the production, because we can
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produce faster, and also we can reduce the cost of this production. So for this
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and Taylorism is making these countries or these industrial powers to increase the production
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and reduce the costs.
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So, technical innovations are letting the US and Europe to increase or to leave a period
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of economic growth.
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What else?
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thanks to this economic growth thanks to these technical innovations that led the industrial
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powers or agricultural powers to increase the production is going to be reflected in first
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a rise in the workers wages what i said the salaries are going to be higher second we are
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going to talk about a period of mass consumption it means everyone wants to buy like nowadays
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we can buy coca-cola it is needed to drink coca-cola no but it's part of the advertising
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campaigns trying to make people to buy new stuff okay so as the workers has higher salaries they
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can pay for other products that maybe they are not products they need i mean we are not talking
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about food or we are not talking about a house we are talking about for example what i said
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different type of drinks different type of clothes etc something that you don't need but you buy it
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because you have money there are advertising campaigns that they are going to try to make
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you or persuade you to buy and also because what we have is bank loans remember the usa
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is giving loans to europe so there is a lot of money in the u.s they want to invest it and one
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of the best ways is to give loans to the population in order these workers or other people to develop
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this mass consumption okay for example these are two other spanish advertisements advertisements
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sorry so chronometer ideal for una peseta okay do you need a chronometer a timer no i don't need
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I donate it, but maybe, ok, it's only one peseta
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So I can buy it and I can maybe give it a use
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Like I'm going to start running, etc
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Why? Because I have money
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I have enough money in order to buy this
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Or I have enough money in order to buy a car
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Maybe I do not have this money to pay the car now
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But I can ask for a loan to the bank in order to pay the car
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OK, so money is moving. The advertising campaigns are trying to persuade population to buy more and more and develop this mass consumption society.
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OK, and everything is possible due to sorry, due to these technical innovations and this economic growth.
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let's check this for example homes with electrical appliances for example the radio in 1912 zero
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percent remember we are talking about a percent of total number of households okay so radio zero
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percent but in 1932 the 65 percent do you need a radio no it's like saying nowadays do you need a
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playstation or a video game no but i have money okay and there are advertising campaigns that
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they are going to persuade me to buy it okay so the idea is i have the money i'm going to buy it
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and i'm going to start developing this mass consumption society so for example vacuum cleaner
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30 percent washing machine 27 percent in 1932 okay nowadays it's almost 100 percent
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iron it means iron is la plancha 65 percent you see the refrigerator the fridge is only
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a 12% or a coffee maker 19% all these machines are are necessary no we have
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survived until 1932 without them but now what we are living is a period of
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economic growth in the US mainly and in second place in Europe okay thanks to or
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due to these technical innovations and thanks to these wages that they are
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higher thanks to advertising campaigns that they are persuading me
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to buy thanks to the bank loans and the mass consumption, okay? What we need, and thanks to
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all of this, sorry, we are developing this mass consumption society. But it is important, keep in
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mind that the wages are higher, that the people is buying, consuming a lot, and they are asking
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for bank loans. This is important for the next slide, okay? How is this going to be reflected
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it in two areas, okay? The first one is the huge stock market boom. It means that as we have a
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mass consumption, the different industrial factories or industrial companies and in the
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agricultural areas, they are going to start producing more and more and more. The problem is
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we can start buying a lot because we do not have a coffee maker or because we do not have a car.
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But as soon as we have one car and they keep producing the cars, it means the production starts to increase.
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And in a specific moment, what we see is the prices are going to decrease.
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Why the prices decrease? Remember la ley de la oferta y la demanda, the law of the offer and demand.
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We said, okay, we produce a lot, as much as we have, and the population is not demanding these products,
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the prices are going to turn down.
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So, as you can see, from 1926 till 1929, this is the moment of the crash, the production is really high, but the consumption, as you can see in the prices, that they are lower, are decreasing, ok?
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so the consumption is decreasing while the production is increasing this is
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going to be one of the main problems for the crisis in 1929 okay because we are
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producing a lot but we are selling less and less and less that's why we need to
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decrease the prices trying to catch the people try to persuade the people to buy
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decreasing the prices okay if we do not decrease the price they are not going to
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Dubai, okay? So this is one of the problems related with the crash of 1929.
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So this period, Los Felices Años 20, is marked by an economic growth, the technical
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innovations, all these characteristics, but one of the main characteristics is a
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huge stock, stock is a cantidad, the quantity of product we have, a huge stock
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market boom, and also the American way of life. And when we talk about the American
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way of life what we are talking about is this this image is perfect what you see is a line
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of unemployed unemployed people in 1929 they are waiting to get a job and this advertisement says
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world's highest standard of living they are talking about america there's no way like the
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american way what is the american way of life to have your own car to have your puppy or your dog
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to live in a family all smiling and buying anything they want okay to have a comfortable life
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okay we individually can move anywhere anywhere we want thanks to our car we are all happy we have
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and we have anything we need and we have a puppy okay we have money not to feed this puppy okay
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but the contrast is this is the american way of life what the companies are selling but this is
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the reality it means after 1929 what we have is unemployment everywhere okay so when we talk about
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american way of life means individual initiative i want to set my own business or okay my own
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business. Individual effort. If I work hard I will get as much money as I want. If I work hard
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I will be promoted in my company and also I will achieve success. So this is the American way of
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life and this American way of life is based on this period of time, los felices años 20, a moment
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of economic growth, with these technical
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innovations, this mass consumption
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and loans that they are going to lead
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to this increase in production and
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decrease in consumption, that's why they are decreasing
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the prices, and also a moment
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a period of time where the population is
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buying new inventions that they
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are going to make our life easier
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to keep our, to maintain or to keep our food fresh, to make coffee really fast, to toast
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the bread really fast, so all these products that we do not know to survive, but they are
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going to make our life easier, and this is known as the American way of life, okay, so
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far so good i hope okay the problem is that we are living in the 20s in the roaring 20s
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is a moment of economic expansion of economic growth but there is a paradox
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what is the meaning of the paradox of prosperity that in the u.s they are going to increase their
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their life standards, they are going to live better, but at the same time they are setting
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the basis of the crisis. Remember this graph, okay? The American way of life means we are going
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to produce a lot and we are going to sell a lot. The problem is we are producing more, more, more,
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more, more, more, and more because what we want is this mass consumption, but the prices are going
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to decrease because the population is not buying so that's the paradox we want this life we want
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this life with the coffee maker etc and we are going to produce a lot but at the same time we
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have no people to buy all this stuff okay because they have increased the wages the salaries but not
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enough let's see this as right okay so the prosperity didn't affect everyone equally what
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I have said okay so we are going to have poor people and rich people and in the middle the
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middle class but the problem is in the 20s we are going to have of course poor people that they are
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now in the middle class but they are not the vast majority of the society so this prosperity this
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increase in production doesn't mean okay that everyone is going to be able to buy so this
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prosperity is not going to be shared equally. For example, this is the data in Europe
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related with the years 2007 and 2017. This is how the wages of the workers is going to increase
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until 2009. Them is going to start decreasing, decreasing, decreasing, decreasing, is going to
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start increasing and and yet they are going to increase the wages but the same
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with the but we are going to talk here with the businessman the businessman
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their their wages are going to start increasing less than the employees but
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in 2013 their their wages are going or salaries are higher they increment is
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higher than if we compare them with the workers or the other employees that they
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are decreasing or that the their salaries are decreasing okay so it means
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depending on where you are in the company if you're a businessman you are
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just sorry if you're a businessman you are a worker or you are in the middle
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okay so you are going to your salary is going to be higher or or lower okay the
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other part is the agricultural prices are going to increase but less rapidly
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than the industrial prices what does it mean that the demand of agricultural products is going to be
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less than the industrial products okay everyone was a car everyone was a machine a coffee maker
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etc but regarding to these agricultural products you are not going to demand them as fast as you
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are demanding these industrial products okay so what is the problem the agriculture the peasants
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in order to produce more, what they are going to do is to ask for money
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to buy this, the machines, to increase
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the production. What makes sense, right? The farmer wants to increase the production
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they are going to buy a tractor and they are going to start producing
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more and they hope that thanks to these
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machines, what they are going to do is increase the production
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and probably earn more money. Makes sense,
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right? What is the problem? The problem is the market, the people that needs to buy couldn't
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absorb all their production, okay? So remember, the problem is we are increasing the production,
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agricultural and industrial, but there is not enough people to buy these products, okay?
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So there is the, here is the paradox, okay? Here is the paradox. When we can, we are producing a
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but we have no people to buy all this stuff, ok?
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So the problem is the stock, it means the quantity of a product we are producing,
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accumulates and the prices fall, ok?
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What we have seen, the production increase, but the prices decrease.
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Why? Because there is no people interested in buying these products.
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However, check this, the production is increasing while the prices are decreasing
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and there is no population buying these products.
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So one question would be why they keep increasing the production
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if there is no people buying the stuff.
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We will see that with the crisis of 1929.
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But keep this in mind.
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They are producing a lot, but they do not have population enough
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to buy these products.
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So the stock accumulates and prices fell.
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So farmers could not pay back their loans.
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perfect the problem is as they are producing more they ask for money to the bank to pay the
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machinery the tractor in order to increase the production they do it they increase the production
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but they have no people okay to buy the production so the farmers have no money to pay back their
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loans make sense the farmer asked for money to the bank in order to pay the machine with the
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machine produce more, but the problem is this production is not going to be bought by the
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population. That's why the farmer has no money enough to pay back the bank the money he has
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borrowed. Okay, so far so good? Venga, let's continue. So, also, they could not buy industrial
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products, so they lost everything. It means, as they have no money to pay back the loans,
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They cannot buy more machinery
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So they cannot increase the production
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They cannot sell more
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So they are going to start losing everything
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It means the industrial production
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Also is going to be affected by the crisis
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So they are producing a lot
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The industrial activity and the agricultural activity
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The farmers ask for money to the banks
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In order to pay the machines
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They have no money to pay back the machines
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because the people is not buying stuff so if the farmers do not need more
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machines the consumption of industrial products is going to decrease so the
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factories are going to start shutting down there is no money to buy industrial
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products make sense these are the basis of the crisis of 1929 we will see them
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in the next class
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so moreover
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the rising wages was
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much lower than corporate
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profits and production
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what does it mean?
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that the companies are producing a lot
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they are increasing the wages
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but not enough
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so these people that they are supposed to buy
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all this production
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they have not money enough
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to pay for these products
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so the people had little
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purchasing power
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Purchasing power means poder de adquisitivo, poder para comprar
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So that's the idea, we are going to suffer an overproduction
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Because the population has no money to buy the stuff
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So the basic idea of this slide is that we are going to increase the production
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but this prosperity the production is producing is not going to affect everyone equally.
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And second, that the increase in the agricultural production and in the industrial production
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is not going to suppose or is not going to have as a consequence an increase in the consumption
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because the people have not enough money to consume
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so that the companies are producing more and more and more
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but the population as they are not increasing the wages
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they can buy less, less and less
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so the companies are accumulating the stock
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they are decreasing the prices
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and they are going to start losing money
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and this is one of the reasons of the crisis of 1929
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And this is one of the reasons why these Felices Años 20 are going to end with this huge crisis.
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So, in fact, overproduction was becoming a problem in the US in the end of the 20s, in the end of that decade, at the end of the Felices Años 20.
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- Autor/es:
- Rubén Peinado González
- Subido por:
- Ruben P.
- Licencia:
- Dominio público
- Visualizaciones:
- 163
- Fecha:
- 17 de marzo de 2020 - 22:59
- Visibilidad:
- Público
- Centro:
- IES ANTARES
- Duración:
- 22′ 18″
- Relación de aspecto:
- 2.05:1
- Resolución:
- 1920x936 píxeles
- Tamaño:
- 64.68 MBytes
