1. Factors of the Boom Flashcards
Industrial Strength
Abundance of natural resources allowed for self-sufficiency
Leading the world in most areas of industry by end of WW1 (e.g. tech/chemicals)
123million population - huge internal market
West = Agriculture
East = Raw Materials
Lots of land for farming - most efficient agriculture in the world
WW1 - trade
Granted access to and a more prominent influence in European markets + markets of their colonies
Only USA had the industrial strength to fill the supply vacuum created by war - guaranteed market with a huge lasting demand
Sold arms, foodstuff and loaned money to the Allies
1 way trade = massive economy boast
WW1 - industry
Facilitated development of plastics + other materials
Improvement of aircraft technology for civilian use
Caused development of chemical + explosives industries
Creation of mass production techniques in order to fulfil supply demands e.g. assembly line
Republican Policies - Trade
Fordney McCumber Tariffs (high import taxes) Cheaper to produce foreign products now cost more than expensive domestic products
Cheaper for American consumer to buy domestic rather than foreign
Created a guaranteed market for domestic producers thus boosting domestic sales and further causing US economy to boom as domestic producers would then reinvest their profits back into their company and the economy
Republican Policies - Company Regulation
‘Laissez Faire’ mentality towards companies (fewer enforced regulations)
Companies could reduce their costs through otherwise illegal means
e.g. child labour/worker exploitation paying below minimum wage with long hours
e.g. Textile mills in South - 56hour weeks with 18 cents per hour wages
Companies could also increase their revenue through illegal means - 40% of wealth generated by business activities in USA by 1929 with 20% of nation’s wealth being held by businesses
e.g. holding companies (large corporation buys several smaller companies all of whom produce the same product and then have each sell their products for the same prices) thus reducing competition and reducing price drops for products
e.g. Price/output fixing between different companies to achieve same results (cartels)
e.g. US Steel and Standard Oil able to dictate output and price throughout their whole industries due to the magnitude of their corporations
Republican Policies - Foreign Policy
Benevolent foreign policy of conciliation (matters solved through diplomacy rather than troops)
Investors allowed to focus on profits more than ethics
e.g. investing in the aggressive Japan rather than stabilising America-China Ill feelings towards America were removed facilitating American investment abroad
Mass Production - Quote
‘Advertising and mass production are the twin cylinders that keep the motor of modern business in motion’ - Kansas city Journal
Mass Production - Direct Effects
Caused decrease in production cost and sales price which led to a drastic increase in sales
e.g. radios - 1920: 60,000 sold -> 1929: 20million sold
e.g. stockings - 1920: 12,000 sold -> 1930: 300million sold
Companies reinvested profits from increased sales into finding new methods of mass productions to further decrease production costs and sales prices in order to further increase sales
e.g. switch form silk to nylon for stockings in 1920s causing more affordable stocking prices
Mass Production - Indirect Effects
Effected other industries (expansion) e.g. the car industry
Ford model T price dropped from $950 to $290 in 1925 over span of 10years - more affordable for average American (3 months of wages)
Sales increase - 1919: 9million -> 1929: 23 million
Caused workforce expansion - companies hired more people in order to keep up with market demand
e.g. car industry - 7% of nation’s workforce belonged to car industry + 9% of nation’s total wages stemmed from car industry
Enhancement of other industries (car materials - leather, rubber, glass) due to effect on car industry
Increase in car production led to increase in demand for materials
e.g. 75% of glassware produced in USA went towards car industry
Credit Influx
• Banks offered credit to allow people to purchase goods and pay back the money at a later date
Caused increase in sales as people could now pay for products in smaller instalments (hire purchase schemes)/on another date and were no longer required to have the money needed to purchase items at the time of purchasing
1929: almost $7billion worth of goods sold on credit
75% of cars + half of major household appliance bought on credit by end of decade
Advertising - How
Radios were used for advertising after KDKA station announced the results of the 1920 presidential election
Other stations also started to broadcast + increase in listeners increasing demand of radios
•
Advertising - What
Advertising created demand for products by keeping a company’s message at the forefront of the consumer’s mind
e.g. Cinemas allowed for effective advertising as the time between movies was filled with commercials
Advertising - Why
Demand needed to be created to fuel to the boom/support the growth in industrial production
Continuous market needed with people frequently buying - consumerist boom
Advertising - Religion
Bruce Barton - accumulation of wealth + consumer society were compatible with christianity - increase in sales
Car Industry - Indirect Effects
Caused workforce expansion - companies hired more people in order to keep up with market demand (1 car produced every 10 seconds)
7% of nation’s workforce belonged to car industry + 9% of nation’s total wages stemmed from car industry
Enhancement of other industries (car materials - leather, rubber, glass)
Increase in car production led to increase in demand for materials
e.g. 75% of glassware produced in USA went towards car industry
