DEPTH STUDY: How far did the US economy boom in the 1920s? Flashcards
what was the boom?
dynamic growth of the american economy in the decade after the first world war
production up, prices down
household goods: hundreds of millions of fridges, cars and nylon stockings
new houses in rapidly growing cities and disposable income meant they spent more on leisure (music radio cinema and sport)
company profits and confidence boomed so investments in stock market grew, and value of stocks and shares grew as well.
lasted until 1929
factors behind boom
Industrial Strength
First World War
Republican Policies
New industries and methods
The car
Mass consumption
State of mind
Industrial Strength
The USA had vast natural resources and a growing population. They served as a important market for USA’s industries who had no need to export outside the country, nor needed recources from outside as the USA had all the raw materials.
USA was major in the markets of: coal, steel, textile, oil, new tech (motor cars, electricity, telephones), chemicals and film.
Selling all over the world.
First World War
They had lent money and sold arms and munitions to B and F, the one-way trade benefited the Americans, who were also able to take over Europe’s trade around the world as they were recovering.
War also allowed USA to pass other countries, for example Germany had one of the world leading chemical industries but they were overcome by the USA when the war paralysed their supply of chemical products
Aircraft was improved during war making space for commercial aircraft (1918 no civilian airlines, 1930 162,000 flights a year)º
Republican Policies
Form 1920 to 1932 all US presidents were Republican
1) Laissez-faire
- government should intervene as little as possible, “rugged individualism” american people were strong and could solve their own problems
2) protective tariffs
- import tariffs made it expensive to import foreign goods (1922 Harding introduced the Fordney McCumber tariff which made imported food expensive in USA) the tariffs protected USA businesses against foreign competition allowing for their rapid growth
3) Low taxation
- was kept as low as possible, especially beneficial to the wealthy. The republican idea was that the more money they had the more they would re-invest in American goods and industries
4) Trusts
- powerful cooperation that dominated industries. The republicans allowed trusts to do what they wanted because they trusted the industries knew better about them than the politicians.
New Industries/ Methods
New methods of productions to exploit its industries to produce steels, chemicals, glass and machinery.
Electricity replaced coal completely in all urban homes from 1918 to 1929
Telephoes, radios, vacumm cleaners and washing machines were produced in a vast scale
Mass production methods meant huge amounts of goods could be produced on a mass scale for cheaper prices so more people could afford them
Luxuries were more accesile; ie silk stockigs only 12,000 pairs sold in 1900 and by 1930 300 million pairs of stockings were sold
The Car (boom)
The automobile industry boomed greatly. The motor had only been developed in the 1890s, when they took a long time to make and were very expensive.
1900 - only 4000 cars made
1908-1925 - over 15 million made
1927 - new car made every 10 seconds
1929 - 4.8 million made
1925 they cost 290, only three months wages
By the end of the 1920’s this was the biggest industry, also providing jobs in the steel, glass, leather and rubber industries They used 75% of USS glass production in the 1920s
Henry ford revolutionised production with production lines (famous model T)
Also helped teh petrol and construction industries, with road construction being the biggest single employer in the 1920s
1/5 owned car in USA
1/43 in Britain
1/7000 in Russia
Car made it possible for houses in suburbs, so more house building
Mass Consumption.
- mass nationwide propanda had been used for the first time to support war effort, so advertisers were now skilled for selling consumer items. They used radio, posters, travelling salesmen and magazines to encourage spending
huge growth in mail-order companies, so people living in remote areas could buy the consumer goods from catalogues, greatly expanding market for products
people could use credit if they didn’t have the money (8/10 radios and 6/10 cars were bought on credit)
chain stores emergedS
State of mind
Americans believed they had a right to prosperity and consumerism was seen as part of being american
Thrift (caution and saving) had been replaced with belief of spending money being a better quality
There was plenty confidence in the 1920s, businesses invested, employed new people, try new ideas. Ordinary Americansº had enough confidence to buy goods or even invest with shares.
problems in farming industry causes
Total US farm income dropped from 22 billion in 1919 to 13 billion in 1928
Causes
1) declining exports
- europe was poor and wouldn’t buy, and also a response to US tariffs stopping europe from exporting to USA
2) new competitors
such as highly efficient canadian wheat producers
3) over-production
1900-20 more ad more land was being farmed, and more efficietly with imporved machinery (combine harvester) and fertelisers. By 1920’s they were producing surpluses of wheat no one wanted
4) falling prices
prices fell as desperate farmers tried to sell i 1921 most farm prices fell by 50%, hundereds of rural banks collapsed in the 1920s and there were five times as many farm bankrupcies as there had been in the 1900/1910s
Farming problems pt. 2
not all were affected, rich Americans wanted fresh fruit and vegetables through year ad shipments of lettuce to cities rose from 14,000 crates in 1920 to 52,000 in 1928, but the majority of farmers in the 1920s were in a time of hardship
about half of the Americans lived in rural areas, working in farming or businesses that sold goods to farmers, so problems directly affected over 60 million Americans.
six million rural americans were forced off the land in the 1920s, many being unskilled workers who migrated to the cities where there was little demand for their labour. African-americans wee especially affected as they had low-skilled jobs that quickly disapeared with the fariming crisis, leaving 3/4 of a millionof them unemployed.
Farming communities greatly criticised republican policies, especially laissez-faire
others that did not benefit
Coal industry struggled
- over-production reduced price of coal and therefore profits
- it was replaced by electricity and oil (a little coal was used to produce electricity, but very little)
- imporved efficiency meant less coal needed
leather/ textile/ shoe-making industries:
- protected from foreign competition by tariffs, but these traditional industries suffered the competition of new man-made materials that were mechanised
- people lost jobs to machines and cheap labour, and the poeple left had low wages
1928 strike to coal industry in north carolina where males were payed 18 and females 9 for an 70h week, with 48 being considered the minimum for decent life.
It is estimated that at the time 42% of americans lived bellow povery line
unemployment
growth in industries did not create many new jobs as they were growing by mechanising production.
same 5% of people were unemployed in 1920 and 1929, but production of goods had doubled, these millions of unemployed americans were not sharing the boom
unemloyed were mainly african americans and imigrants, usually hispanic
with so much poeverty the boom was likely to fail, but the governemnt wasn’t going to involve itsef
Chicago 1920s
One of americas biggest cities, centre in steel, meat and clothing industries, with busy and slack (seasonal employment) periods
- only 3% of semi-skilled workers owned a car (compared to other areas with 29%)
- didn’t buy large items on credit, saved for when they had the money, but still bought small items such as radios on credit
- didn’t buy at chain stores, bought at local stores were owners were more flexible and gave them credit
