(1a) Features of the economic boom (economic prosperity)

Question 1

Features of economic prosperity:

What changes in industry and business techniques were there?

Answer 1

1. Mass Production due to the assembly line method (more efficient).
2. Management science
3. Advertising.
4. The automobile
   
   • Car ownership - 1920: 7.5 million. 1929: 27 million.

Question 2

Features of economic prosperity:

Technological advances

Answer 2

• Advances and time saving devices had an impact on leisure.
• Products became more available due to Hire Purchase (pay in installments).
• Number of electrical goods sold per year went from 1.4 million (1912) to 160 million (1929).

Question 3

Features of economic prosperity:

Unemployment and Production

Answer 3

• Unemployment never rose above 3.7%.

- 1922-1929: Production of industrial goods rose by 50%.

Question 4

Government encouragement for business and laissez-faire economics:
Republican Government

Answer 4

Believed in…

• Low taxes and limited government activity
• Minimal interference in the economy
• And the benefits of big business
  
  • Calvin Coolidge and his treasurer (Andrew Mellon) reduced taxes to favour the wealthy - 50% to 20% between 1921 and 1926.

Question 5

Government encouragement for business and laissez-faire economics:
High Tariffs

Answer 5

Fordney McCumber Tariff, 1922:

• Tax on imports to the USA.
• Goods in the USA were cheaper but made it harder to sell abroad.
• Limited foreign trade.
• Some domestic producers were given a guaranteed market.

Question 6

Government encouragement for business and laissez-faire economics:
Advantageous foreign markets

Answer 6

• Govt encouraged business investment abroad.

- Especially raw materials - oil in Canada and Iraq, por ejemplo.

Question 7

Government encouragement for business and laissez-faire economics:
Hire Purchase

Answer 7

• Easily available credit helped fuel the boom.
• This meant ordinary people could buy the latest technological and luxury goods - became more affordable.
• 1929: Roughly $7 billion worth of goods were sold using credit.
  
  • 75% of cars
  • 50% of major household appliances.

Question 8

Limitations of Economic Prosperity:

Uneven Distribution of wealth

Answer 8

• Prosperity concentrated in the north and far west (mainly industrial north east).
• 60% of families on less that $2,000 a year.

Question 9

Limitations of Economic Prosperity:

Farmers

Answer 9

• Huge increase in demand led to overproduction and a devastating fall in prices - $2.5 per bushel to $1 (wheat).
  
  • Reasons why: End of WW1; Prohibition; Production of synthetic fibres; Modern machinery; High foreign tariffs.
  • Republican policy: Agricultural Credits Act 1923 tried to encourage small farmers to form cooperatives - large farming businesses benefited from this (could afford to take out the loans).

Question 10

Limitations of Economic Prosperity:

Black Americans

Answer 10

• 85% were living in the south as sharecroppers (ie, very poor).
• Many migrated north which led to the ghettoisation of urban areas (Harlem black population: 1914 - 50,000 1930 - 165,000.)

Question 11

Limitations of Economic Prosperity:

Women

Answer 11

• Only 150 dentists and less than 100 female accountants.
• Only 2 women in the House of Representatives (435 delegates).
• Tended to remain in low paid menial jobs - 700,000 women were domestic servants.
• Women receiving a college education fell by 5% across the period.
  Less than 2% of judges or lawyers were women.