Depth Study - US Economy Boom

Question 1

Def. Economic Boom

Answer 1

A rapid growth in a countries money making that leads to greater prosperity

Question 2

What was Economic Growth based on in the 1920s?

Answer 2

Consumer goods that people wanted to buy but didn’t really need boosted the economy

Question 3

What was the increase of cars in the US from 1919 to 1929?

Answer 3

From 9 million to 26 million

Question 4

What was the increase of radios from 1919 to 1929?

Answer 4

60,000 to 10 million

Question 5

What was the increase of telephones from 1919 to 1929?

Answer 5

10 million to 20 million

Question 6

How did the war change the USA?

Answer 6

• Increase in nationalism
• Increase in WASP (White Anglo-Saxon protestants) dominance as the image of the US, causing everybody else to suffer as they did not fit into the nationalistic vision of the US (e.g. African-Americans and Immigrants)
• Booming factories in the North offer many jobs and opportunities
• Propaganda becomes the base of advertising as people who made propaganda during the war reconvert themselves
• A higher control of work unions during the war continued during the 20s, and the US remains anti- worker unions as they believe everything can done on one’s own
• There was an increase in women’s rights to vote, but this was not caused mainly by the war

Question 7

What were the aspects of the US Economy Boom?

Answer 7

• Growth of American Businesses
• Increase in buying power and consumerism
• Increase in confidence and risk-taking by Individuals, companies and Banks e.g. stocks
• Increase in government spending
• Increase in entertainment

Question 8

Explain why the growth of American businesses was an aspect of the US Economy boom

Answer 8

The boom in the economy meant that businesses grew quickly and developed faster, while finding cheaper ways to manufacture goods. The goods themselves became more available to the citizens of the US.

Question 9

Explain why the increase in buying power and consumerism was an aspect of the US economic boom

Answer 9

Ordinary people earned more money which they could spend on leisure and consumer good. Because buying power increased, families invested in houses in the suburbs of large cities (because now they could quickly go back and forth with cars)

Question 10

Explain why the increase in confidence and risk taking was an aspect of the US Economy boom

Answer 10

Because businesses prospered and grew, and jobs were plentiful, people were more likely to take risks such as invest in the stock market, and banks and companies as well. Stocks was seen as a reliable way of making free money.

Question 11

Explain why the increase in government investment was an aspect of the US Economy boom

Answer 11

Because the US economy was thriving, the government could use their tax to build infrastructure such a roads, electricity lines and phone lines. These were also increasingly necessary as more cars, phones, and electrical appliances were used.

Question 12

Explain why the increase in entertainment was an aspect of the US Economy boom

Answer 12

Because people had more money to spend, and the aim in life was to have fun, the entertainment industry emerged. More people could afford to watch movies or play sports.

Question 13

Why did the US economy boom?

General Categories

Answer 13

• Industrial strength
• Benefits from World War 1
• New ideas & industries
• Prosperity
• Republican policies
• Confidence in the system

Question 14

How did industrial strength contribute to the causes of the US economy boom?

Answer 14

• The US had large and rich natural recources e.g. Oil (texas), coal (Kentucky), Iron (Chicago)
• They also had good agriculture due to the sheer amount of land that was available e.g. for cattle ranching (Colorado)
• US companies did not need to import from other countries

Question 15

How did WW1 contribute to the causes of the US economic boom?

Answer 15

• The US sold war goods to Britain & France (e.g., food & munitions) - the one-way trade boosted the US economy
• The war was fought in Europe which disrupted Britain & France, allowing the US to catch up and overtake them as a superpower
• Countries borrowed huge sums of money from the US e.g. Britain owed the US 900 million pounds at the end of WW1
• America took over overseas markets e.g. in chemicals, where Germany was leading before the war
• Their aircraft technology improved and planes became commercial

Question 16

How did new ideas and industries contribute to the causes of the US economic boom?

Answer 16

New Ideas spread and changed the way things were done to make them more efficient
- Henry Ford made his first assembly line in 1913
- Cars such as the Ford Model T became affordable and widespread, costing only 3 months’ worth of a factory worker’s wage
- Suburbs could be built away from cities
- In 1929, their factories produced one car per 10 seconds
- This was due to the new concept of assembly belts that massively increased productivity
- Goods became cheaper and more accessible e.g. silk stockings, which only 12,000 had been sold in 1900, 300 million nylon versions were sold to a female population of 100 million women
- The country was able to exploit its vast resources
- Electricity revolutionised households, and electrical consumer goods became widespread

Assembly belts were quickly used in other businesses

Question 17

How did prosperity and Mass Consumption contribute to the causes of the US economic boom?

Answer 17

• Virtuous cycles lead to the growth of old businesses and the birth of new ones
• These meant jobs were plentiful and money-making was relatively easy
• People were confident to invest and buy consumer goods
• There was a sense that the virtuous loop that fed into the US economy was unstoppable
• Keeping money for later was no longer a popular concept
• Buying on credit became more common - 8/10 radios and 6/10 cars were bought on credit
• Propaganda reconverted itself into advertising
• Goods could be mail ordered after looking at goods catalogues i.e. 1/3 of citizens bought goods from Sears, Roebuck and Company Catalogue

Question 18

How did Republican policies contribute to the causes of the US economy boom?

Answer 18

• The policy of ‘Laissez-faire’ became dominant
• This was the idea that if Republicans did not set minimum wages or standards, the economy would regulate and stabilise itself, and be free to make the maximum amount of money possible
• Tariffs e.g. Fordney McCumber Tariff 1922, were imported on imported goods making money for the government and encouraging Americans to invest in American products, fueling its own economy
• Taxes were low so people who had more money could spend it on American goods thus fueling the economy
• Rugged individualism - People were told the only way to succeed was by their own hard work. This encouraged more people to work harder
• Powerful trusts - Large companies controlled a monopoly of some resources and were allowed to do anything with them

Question 19

How many people in the USA owned a car in the late 1920s?

Compare this to Britain & Russia

Answer 19

1 in 5 people compared to 43 in Britain and 7000 in Russia

Question 20

Describe the US Government System

Answer 20

• Federal system - all individual states look after their own internal affairs
• The Constitution - lays out what the government is supposed to do and how to operate
• The President - the single most powerful polictician in the USA, elected every 4 years. Kept in check by both Congress and Supreme Court
• Congress - made up of politicians that run the country along with the president
• The Supreme Court - Made up of very experienced lawyers, makes sure that the government does not misuse it’s power or pass unfair laws
• Parties - The two main political parties were the Republicans (mainly in the north at the time) and the Democrats (Mainly in the south at the time). rpublicans had more power during the 1920s

Question 21

Which nation led the industrial production during the 1920s?

Answer 21

The US produced more than the rest of the world, and dominated most markets

Question 22

Why did the US economy Boom?

Use Mnemonic

Answer 22

Laissez faire
Assembly line
Credit
Knowledge

Position of USA in the world
Advertising
New consumer goods
Tarrifs
Shared confidence & confidence in shares

Question 23

Why was the agricultural sector struggling during the 1920s?

Answer 23

• Falling prices
• Over production
• New competitors
• Declining exports

Question 24

Why were declining exports a factor contributing to the struggling of the agricultural sector in the 1920s?

Answer 24

• Europe imported less food from the Us afer the war
• This was because europe was poor
• It was also a response to US tariffs that practically cut off European exports to the US

This meant less places for the farmers to export their food

Question 25

By how much did the total farming income drop from 1919 to 1928?

(In dollars)

Answer 25

22 to 13 billion dollars

Question 26

Why were new competitors a factor contributing to the struggling of the agricultural sector in the 1920s?

Answer 26

• US Farmers struggled against the highly effficient Canadian wheat producers
• The population of the US fell so there were less mouths to feed

Farmers were forced to lower food prices

Question 27

Why was over-production a factor contributing to the struggling of the agricultural sector in the 1920s?

Answer 27

• From 1900 to 1920, farmers were doing well due to the improved machinery and improvement of fertilisers
• More and more land was being farmed
• Farms were producing surpluses of wheat and of their foods which nobody wanted

Therefore the prices of wheat went down drastically

Question 28

Why were falling prices a factor contributing to the struggling of the agricultural sector in the 1920s?

Use statistics to describe the consequence of falling produce prices

Answer 28

• Farmers could no longer earn enough money with their produce due to the falling prices
• In 1921, most farm prices fell by 50%
• Hundreds of rural banks collapsed
• There were five times as many farm bankruptcies as there had been in 1900s and 1910s

Question 29

Why weren’t all farmers affected by the decline in agriculture profits?

Give an example

Answer 29

• Rich Americans wanted fresh produce
• This caused shipments of lettuce to cities to rise from 14,000 crates in 1920 to 52,000 in 1928

Question 30

What were the impacts of the decline in farm income in the 1920s?

Answer 30

• 6 million rural Americans, mainly farmers, were forced of land
• Many of these were unskilled workers who migrated to the cities where ther was not much need for their labour
• African-Americans were badly hit - three quarters of a million African Americans became unemployed
• Farmers became the fiercest critics of the rebublican ‘Laissez Faire’ policy
• Farm Prices fell by 50% in 1921
• There were five times as many farm bankruptcies as there had been in 1900s and 1910s

Question 31

Which two groups did not benefit from the US economic boom in the 1920s?

Answer 31

• Farmers
• Traditional Industries

Question 32

Why did traditional industries struggle in the 1920s?

Answer 32

• Over production
• Falling prices
• Replacement by other businesses
• Processes bacame mechanised
• Shift to electricity

Question 33

Why was over-production a factor contributing to the struggling of the traditional industry sector in the 1920s?

Answer 33

• Machinery got more efficient
• Assembly lines meant faster rates of production
• Prices fell as surpluses were produced

Question 34

Why did the coal industry suffer in the 1920s?

Answer 34

• It produced surpluses of coal now that machinery made coal extraction and processing more efficient, resulting in falling prices
• Coal power was being overtaken by newpowers such as electricity and oil
• Even though coal was used to generate electricity, the generation was very efficient and required much less coal that traditional methods
• New boilers and heaters became more energy efficient, meaning less coal was needed to produce the same amount of heat

Question 35

Why did the leather, textile and shoe making industries suffer in the 1920s?

Answer 35

• They were not growth markets (they did not grow fast due too profits)
• They suffered from new artificial materials that were faster and easier to produce
• Workers lost their jobs as all these processes became increasingly mechanised
• Skilled workers struggled to compete against cheap labour and machinery in the southern states
• Wages did not increase as fast as company profits and dividends to shareholders

Question 36

Why was falling prices a factor contributing to the struggling of the traditional industry sector in the 1920s?

Answer 36

The surpluses from over production and lack of demand due to new innovations caused prices to fall

Question 37

Why was replacement by other businesses a factor contributing to the struggling of the traditional industry sector in the 1920s?

Answer 37

New industries such as electricity, cars and artificial textiles ovetook old ones such as coal and leather. These traditional industries could not keep up with the other industries and demand for the traditional industries fell.

Question 38

Why was mechanisation a factor contributing to the struggling of the traditional industry sector in the 1920s?

Answer 38

Machines were becoming cheaper and more efficient than workers in the industries traditional industries competed agaist. They were increasingly used in traditional industries as well. This meant there were less jobs for workers and this caused low wages and unemployment.

Question 39

Why was the shift to electricity a factor contributing to the struggling of the traditional industry sector in the 1920s?

Answer 39

Coal industry, one of the greatest employers before the 1920s, became less needed as electrity bacame more used. New appliances that ran on electricity overtook old ones.

Question 40

Describe the condition that led to the strike in coal industry in North Carolina 1928

Answer 40

Male workers were paid $18 whole female workers were paid $9 then $48 perweek was considered the baseline to have a decent life. These workers had a 70 hour work week.

Question 41

Describe the distribution of money in the USA in 1925

Answer 41

32% of the money went to the richest 5% while 10% of the money went to the poorest 42%

Question 42

How many Americans were under the poverty line in the US during the 1920s?

Answer 42

42%

Question 43

Why were the high poverty levels in the US a restricting factor to the boom?

Answer 43

It meant almost half of the US population were not spending their population or buying on credit, so the money earned by these people was not fed back into the economy. In addition, it meant once all the middle and upper class had bought new goods such as cars and radios, they had no need for more and because the lower class could not afford to buy any, the new industries were bound to face a decrease in production.

Demand was likely to tail off and the US economy was a consumer-led boom…

Question 44

Why was unemployment still a problem in the 1920s while most industries were booming?

Answer 44

• Many poor people, both whites and but more especially African-American and Hispanics, did not share in the boom
• This was because machinery replaced humans in factories
• Republican policies refused to intervene

Question 45

How did umeployment change in the 1920s?

Answer 45

5% of people were unemployed, which is about the same as in the the past decades, even though production was doubled

Question 46

Describe Chicago in the 1920s

Answer 46

• One of America’s biggest cities
• Centre of meat, steel and clothing industries
• It had slack periods where people were ‘seasonally unemployed’
• Many of these workers were Polish, Italian or African-American migrants from the south

Question 47

What are the 3 case study points for Chicago in the 1920s

This info is useful as evidence in a PEE paragraph

Answer 47

• Only 3% of semi-skilled workers owned a car, while in richer areas, this figure was 29%
• Workers in Chicago didn’t like to buy large items on credit. They wanted to save money for times where they did not have a job
• The poor workers did not use the new chain stores that were revolutionalising shopping. They preffered to buy at a local grocers where the owner was more flexible and gave them credit

Chain stores were mainly in middle class districts not lower class