Reasons For The Boom Flashcards
Government policies
Laissez faire Low taxes-revenue acts Reduce trade unions Protective tariffs for trade Isolationism Reduce business regulation: Adolphe Zukor who owned paramount pictures eventually controlled one tenth of all US cinemas
Technical advances
Application of electricity
Production line
Motor vehicle industry and chemical industry
Electrical consumer goods
New business methods
Growth of huge corporations (cartels and holding companies)
Management science
Advertising and salesman ship techniques
Easy credit
Low interest rates
Investment and speculation
Role of banks and stock exchange
Influence in foreign economies
Us gov encourage businessmen to develop interest abroad in terms of raw material
Firestone Corporation developed a rubber industry in Liberia as well as Oil companies buying oil concessions in countries such as Canada and Iraq
Developed public health schemes in developing countries (but to make healthy workers)
Exports-33% of all Ford tractors went to soviet Russia, within Russia 85% of all tractors were made by Ford (1929)
Private investment in foreign countries rose from 7000m in 1919 to 17,200 m in 1930
Phycological state of mind
Feeling of optimism
Anyone can become rich in America
Faith in future
BONUS-effects of the great war
America became very prosperous during the war
Taylorism
Scientific management
Fred Taylor wrote the principles of scientific management in 1911
Hugely influential
Established the idea of the “time and motion study”
Ford
Unions forbidden but paid $5 per hour for incentive to work hard
Conveyer belt
Vertical integration-river rouge plant included glass factory, steel mill and assembly line
Assembly line
Mass production-by 1927 15 m model t
By 1920 had fought out all other stockholders and became sole stock holder
Fordney-McCumber Tariff Act 1922
Higher tariff acts than the 1921 emergency agricultural act
American valuation plan
Had a high level duty of 38%
President given power to vary rates by 50%
Credit
Manufacturers set up finance companies to help car dealers buy cars and this type of loan became available to the public
Credit allowed you to buy now and pay later
By the end of the 20s 75% if radios were brought on credit
75% of all cars and 50% of household appliances
New sales methods
Mail order catalogues-department store
Advertising-billboards, magazines, radios and unique selling points
Stock market boom
Land and building speculation decline in 1926 and stock market speculation rocketed
Helped by Mellon’s tax reductions
Brought stock on the margin
Shares rose in price and then sold
By 1929 1% held stocks and shares
Raskob “anyone could be worth $80,000 in 10 years if they invest $15 a week in the stock market”
Did everyone benefit from the boom?
NO
Native Americans
African Americans
Farmers
Farmers
66% of farms operated at a loss
1919-1921 value of farm products halved from 10 billion to 4 billion
Cotton prices went from 42 cents in 1920 to 10 cents in 1921
