Depth Study: 1. How Far Did The US Economy Boom In The 1920s? Flashcards
On what factors was the economic boom based?
Republican policies:
The government followed policies favourable to industry. The policy called “Laissez-faire” meant that the government favoured non-intervention, they made as few restrictive laws as possible.
They made high tariffs on foreign goods so they became more expensive than domestic ones. This meant people were more encouraged and more likely to afford and buy domestic goods so profits went to domestic factories and money remained in America.
They had little tax as they believed if people were able to keep their money, they’d more likely to spend it. This meant that wealthy people would reinvest their money in industries.
They allowed trusts, super-corporations which dominated industries to do what they wanted as they believed these ‘captains of industry’ knew better than politicians.
World War One:
During WWI the USA had made a lot of money through loans to Europe and by selling weapons and exporting food to European countries.
The motor industry and mass production:
Henry Ford pioneered the use of the assembly line. This meant from 13 hours needed to produce a car, by 1913 only three minutes were needed. This meant the cost could decrease, in 1908 a car would be $850, by 1925 a car would cost $290, less than 3 months’ wages of an average-paid worker. In 17 years, 15 million Model T Fords were produced.
To make up for the monotonous work Ford doubled workers wages to $5 a day.
In 1927, cars were produced every ten seconds.
By mid 1920s, the automobile industry was America’s biggest. One in five Americans had a car.
Cars led to the development of other industries as well e.g. glass, by mid 1920s 75% of US glass production was for cars, 80% of rubber was also for cars.
Hire purchase credit:
Hire purchase meant more people could afford products as payment was spread over many instalments every month. This, in turn, increased the demand for goods and increased sales which meant there was an increased demand in factories which produced more jobs and higher wages. By the end of the 1920s, an estimated 60-75% of cars, 75% of radios and 80-90% of furniture was with hire purchase. Credit was used to purchase 90% of durable goods.
Why did some industries prosper while others did not?
Building and construction:
This industry prospered. There were more buildings undertaken in the 1920s than at any other time in the history of the USA. Roads, general buildings and skyscrapers were all being built in this time.
Cotton and wool:
Due to developments in clothing and new synthetics, demand for cotton and wool decreased. Furthermore, changing fashions meant less fabric was needed to produce clothing. In 1900, 12,000 pairs of silk stockings had been sold, silk was a luxury item. Using cheaper synthetics, by 1930, 300 million pairs of stockings were sold.
Steel:
Car consumption consumed 20% of all building outputs. The building industry also needed steel.
Coal:
Due to cheaper, cleaner, alternatives, the coal industry declines.
Agriculture:
More than 25% of Americans were employed in agriculture. During WWI agriculture boomed as it was sold to European countries who’s farms were destroyed in the war.
However, after the war European countries could produce their own food. Adding to this, European countries did not buy many American good due to the high tariffs placed on their products.
Canada became a rival to the global agriculture industries in America.
American diets were changing away from foods like barely and cereal. They started buying more fruits and vegetables. When alcohol was banned demand for barely reduced by 90%
Overproduction meant that all the produce could not be sold so prices fell.
In 1921 alone, farm prices fell by 50%
1 million farms closed between 1920-1930.
Did all Americans benefit from the boom?
Black Americans:
~1 million black people lost their jobs as a result of the decline in agriculture. Many black people worked in southern America on farms.
Many black people move to northern America in search of employment. Many found discrimination here too, with higher paid jobs often being reserved or received by white people. Many black people therefore took on the less well-paid jobs. In cities like New York black people often lived in neighbourhoods like Harlem, which came to see a ‘Harlem renaissance’ of black artistic and culture production.
Indigenous Americans:
From the 1800s onwards, Native Americans were forced off their land and into reservations by the US government. These areas had poor soil generally, so growing produce was hard. Poverty, ill-health and educational standards were inferior to other parts of America. Those who left the reservations met racism, discrimination and prejudice, with low paid work the only option.
Non-WASP immigrants:
These immigrants were seen as inferior. For these new immigrants, the lowest paid jobs were the only ones available. Unemployment amongst new immigrants was high, with racism and discrimination against those from Southern and Eastern Europe amongst many another ‘reason’.
The unemployed:
Around 5% of Americans remained unemployed through the economic boom. This disproportionately affected under-represented groups (such as the ones mentioned above).
