Economic Boom of 1920s Flashcards
GNP in 1920 and 1929?
- GNP in 1920: $73.3 billion
- GNP in 1929: $104.4 billion
What were the unemployment and inflation rates?
- Unemployment remained relatively low at 3.7%
- Inflation never rose above 1%
How much did profits for US businesses rise between 1923 and 1929?
Profits for US businesses saw a 67% rise 1923-1929
By how much did real wages increase 1923-1929?
Real wages rose by 13% 1923-1929
Where and what were the natural resources found?
- Coal fields in West Virginia and Kentucky
- Huge reserves of oil in Texas and California
- Vast amounts of metals (iron, copper, lead) which were needed for manufacturing/ industry
What was the effect of “from home” natural resources?
- US didn’t have to pay import taxes, cheaper= powered economic growth
- Created jobs in mining
What was developed to exploit natural resources? How many miles of railway in 1916?
- Huge transportation network
- 1916: over 254,000 miles of railway in place, used to transport goods and raw materials
What was the population of the US in 1920 and 1929?
- 1920: 106 million Americans,
- 1929: almost 122 million Americans
- far outweighed Britain’s 42 million
What were the advantages of a large population?
- After WW1 millions of immigrants immigrate to US= cheap labour for US businesses, as immigrants more likely than Americans to accept lower wages
- Wider domestic market, more people= increased demands for goods and more people working jobs to fuel this demand
What was the Spirit of Enterprise?
- Belief that prosperity and wealth of the 20s was going to be never ending
- Rugged individualism seen as the basis for economic advancements
What was the American Dream?
- Anyone can succeed and become very wealthy if they work hard, America provides opportunity for social mobility.
How was the idea of the American Dream sold?
- Highly advertised, specifically attracted immigrants with slogans
- Self made millionaires Ford and Andrew Carnegie= real proof of the American Dream
What is Hire Purchase?
Consumers pay for a fraction of the total price upfront and pay off rest in monthly instalments
By how much did real wages increase and what was the impact?
Real wages increased by 13% = more disposable income and demand for goods
What was consumer borrowing in 1920 vs 1929?
1920: $2 billion, 1929: $8 billion
What was the effect of hire purchase?
- Encouraged even those without money to spend
- Widened market: goods previously considered luxury now bought by m/c and w/c on hire purchase e.g. hoovers, fridges, washing machines, cars
- 75% of cars bought on hire purchase
What was the impact of Ford’s Assembly Line?
- One worker assembles one specific part of a car over & over, skilled workers no longer needed= cheaper labour, more profit
- Assembly line moves at steady pace= sets rate of production
How long did it take to produce a car in 1913 vs 1923?
- 1913: 12.5 hours to produce a Ford car
- 1923: 2 hours 40 minutes
What was the effect of the creation of large industrial corporations?
Large industrial corporations bought up natural resources, controlled whole manufacturing process & sales from products. Benefited from economies of scale, lower raw material costs= pass savings on to consumers.
What is an example of a large corporation that controlled a very large proportion of the market?
Samuel Insull- controlled 111 separate but linked companies by 1929, $3 billion value
What was ownership of US electricity supply industry like?
By 1929, 16 companies controlled 90% of US’s electricity supply industry.
What was the most produced car in the 1920s?
Ford Model T, available only in black, cheapest colour to manufacture.
How much did the Ford Model T cost?
Price dropped from $950 in 1918 to $290 in 1925 as a result of mass production (higher output, lower prices)
How many car registrations were there in 1920 compared to 1929?
- 8 million in 1920
- 26 million in 1929.
How many cars was Ford producing in a year?
1.25 million cars a year
How many workers did the car industry employ?
375,000 workers
What percentage of the manufacturing workforce did the car industry employ? What percentage of manufacturing wages?
By 1929: employed 7% of all manufacturing workforce, paying 9% of all manufacturing wages= more disposable income for workers, fuelling consumerism
What industries did the automobile stimulate?
Stimulated growth of steel, rubber, glass and oil industries (petrol and materials for production)
What was used to convince customers to buy?
Advertisements and mass marketing e.g. billboards on roads, but especially using radio
What and when was the first commercial radio station introduced?
KDKA: first commercial radio station in 1920
How many commercial radio stations were there by 1929?
By 1929: 619 commercial radio stations sponsored by corporations, broadcasting products to the masses.
What leisure activity saw a rise in the 1920s?
By 1929: rise in cinema, every town had a cinema with Hollywood films broadcast.
What was the effect of electrification?
Increase in demand for goods needing electricity e.g. labour-saving devices such as vacuum cleaners, washing machines, fridges.
How many electrical appliances in the US in 1912 vs 1929?
- 1912: 2.4 million
- 1929: over 160 million.
How many radios were sold in 1929? What percentage of households had a radio by mid 1930s?
Over 10 million radios sold in 1929 alone, 75% of US households had on by mid 1930s
What was the impact of more car ownership?
- People able to live further from work= fuels growth of suburbs.
- Ability to travel= rise in holidays out of state, fuelling leisure industry e.g. Atlantic City, New Jersey (seaside resorts), national parks become more popular.
What was the 1921 Federal Highways Act?
Gave government responsibility of building roads, aiding transport/ travel.
How many miles of roads was there in 1920 vs 1929? What was the effect of this?
- 1920: 350,000 miles
- 1929: 662,000 miles
- created more jobs in the construction of roads
What is laissez-faire politics?
Limited government intervention and regulation of industry and businesses
What was the 1922 Fordney-McCumber Tariff? What was the downside of this?
- Put tariffs on foreign goods (chemicals, textiles, farm products) so people are encouraged to buy American goods, seen as cheaper= more profit for American industries
- Downsides: Other countries responded by raising tariffs on American goods= less US exports
- Did not deal with problem of agricultural overproduction, led to a fall in farm product prices
What was the 1926 Revenue Act?
- Lowered tax rate on high earners from 50% to 20%
- Lowered taxes on transfer of property and repealed the gift tax
What did Secretary of Treasury Andrew Mellon do?
- Handed out $3.5 billion in tax reduction in 8 years
- Balanced federal budget so that gov made money under Coolidge e.g. $677 million profit made in 1925, reduced national debt
How did the Federal Trade Commission and Republican Government favour businesses?
- Reduced regulations on businesses
- Did little to regulate work hours or the use of child labour
- Wage rates were kept low
- Ignored illegal price-fixing used to raise profits
How were Trade Unions treated differently in WW1 vs under the Republican Government of Coolidge?
- During WW1, federal gov protected rights of workers to join Trade Unions (over 4 million members) but Coolidge has said “the business of America is business”. Trade unions faced a difficult time in the 1920s.
What was “The American Plan”?
A slogan for reducing union power, increasingly popular amongst employers with anti-union views e.g. Ford. No-strike and no-union agreements forced on workers.
How much had Trade Union membership declined by 1929?
1929: union membership declined by nearly 1 million
How did the Supreme Court contribute?
- Supreme Court made 4 significant anti-Union decisions from 1921-25, restricting their power
- 1922: Attorney General Dougherty broke the railroad shopman’s strike by securing support of a business-friendly judge.
