Chapter 2: The Capitalist Boom Of The 1920s: Strengths And Weaknesses In The US Economy Flashcards
Strengths in the US economy
The capitalist boom in the 1920s
at the beginning of the 20th century, the US emerged as the worlds leading industrial power
- it was a huge country, with vast fertile plains, and many agricultural food crops were grown
- it had large supplies of natural resources such as coal, iron, and oil which were used in factories
- it had a big population, with many recent immigrants who were prepared to work hard and accept low wages which kept the cost of production low
Impact of WW1 1914-18
WW1 was another reason why the American economy and its industries grew rapidly at this time. American industries and banks supplied the European allies with the vital food, weapons, goods, and money they need to fight Germany.
America also took over Europes overseas markets. During the war European trade was disrupted. By the end of the war, the USA had become the creditor nation European countries owed it 300 million dollars
Republican leaders and policies
In the 1920s, the US was governed by the republican party. President Warren Harding and President Calvin Coolidge both believed that government should not intervene in the economy should leave businesses alone to do their job
Calvin Coolidge was vice president when Warren Harding was president. Harding died in 1923 while he was still president and Coolidge automatically became president
The Republican government in the 1920s
- introduced import tariffs which made it expensive to import foreign goods into the US which protected American industry and encouraged Americans to buy goods produced in America which helped the economic boom. But, foreign countries retaliated by placing similar tariffs on US goods which made it difficult for the US to sell its goods overseas and contributed to the problem of overproduction by the end of 1920
- Cut taxes so that people would have more money to spend and the wealthy would reinvest their money in the industry
- allowed trusts to develop. these were large corporations that joined together to form a single company which then controlled all the trade in a single product
- they did not approve of trade unions because they believed they interfered with the effective running of businesses. Employers were encouraged not to allow the formation of trade unions. They were also allowed to use violence to crush strikes which resulted in trade union membership declined in the 1920s meaning that most industries were able to pay workers low wages and force them to work long hours
New technologies and innovations
The US experienced a consumer revolution in the 1920s. Due to the economic boom, Americans bought more goods. The government allowed businesses to exploit the country’s vast natural resources to produce steel, chemicals, oil, machinery. These products became the basis of an enormous boom in consumer goods
new technologies and innovations included what?
- the start of radio
- The widespread availability of electricity which stimulated demand for electrical goods such as vacuum cleaner, refrigerator and washing machine
- the movie industry and the development of talking pictures
- the car industry, which pioneered mass-production
it also caused a boom in steel, glass, rubber, petrol, petrol stations, and insurance
Advertising and hire purchase
played a major role in the growth of American consumerism. Mass advertising made people feel luxury items were necessities. mail-order catalogs, posters, the radio and movie commercials all encouraged to buy them on credit
hire purchase schemes were introduced, where people could buy goods and pay for them weekly installments, paying interest on the loans which encouraged people to get into debt, owing money to the banks and finance companies
Unit 2: Weaknesses in the US economy
5 percent of Americans received one-third of all personal income in the country, while 60% percent of families lived below the poverty line and could only afford the bare necessities
Problems of farmers
Agriculture was the worst affected industry of the 1920s
Farmers had done very well during world war one cuz they were able to sell their produce in European markets nut after the war, Europe began to increase its food production. Tariff barriers against American grain made it expensive to import and international demand for American wheat declined
Overproduction was at the heart of farmers’ problems.
|mporved machinery, especially the combine harvester and better fertilizers made American culture extremely efficient
As a result, farmers were producing more than they could sell. The price of wheat collapsed and many farmers could not pay back the loans they had taken out to buy land and machinery. They lost their land and livelihood
Problems of African Americans
Black working on farms were the first to be laid off when the agricultural crisis hit. In the southern states, where more than 75% of blacks lived, they faced legalised discrimination under the Jim Crow laws. They were forced to use separate public facilities, go to separate and inferior schools and live in separate neighborhoods. They were also victims of the Ku Klux Klan, a group of white supremacists who use violence and intimidation to make sure the blacks did not forget their low social standards. The kkk also persecuted Catholics and JEWS
Who were the Ku Klux Klan
a group of white supremacists who use violence and intimidation to make sure the blacks did not forget their low social standards.
Problems of Native Americans
Native Americans also failed to benefit from the prosperity of the 1920s. The majority of the Native Americans were forced to live on reservations. These were areas set aside by the American government and were usually dry areas with poor soil which made it very difficult to make a living off the land. Land on reservations was a continual struggle with very few opportunities
Prejudice in America
Between 1900 and 1914, more than 13 million immigrants arrives in the USA from southern or easter Europe. In the 1920s the US government began to restrict the flow of immigrant who were mostly catholics and Jews and included Italians poles and Greeks. There were a number of reason why the immigrants were made to feel unwelcome. There were growing religious and racial prejudice and the government feared that new immigrants would take jobs from long established Protestant Americans. In addition, may new immigrants had socialist ideas and supported trade unions, which was seen as un American
