Reasons for the boom in the US economy 1920s Flashcards
List the main factors in causing the economic boom of the 1920s.
- WW1
- Republican policies
- Technological change and new business methods
- Consumerism and advertising
- The car industry
- Stock market boom
Republican policies - if businessmen were left alone to make their own decisions, what was thought to happen?
High profits, more jobs and good wages would be the result. This was the policy of LF.
Republican policies - what did low taxation and few regulations mean?
Businessmen were able to chase profits without fear of interference. Laws concerning price fixing were often ignored.
Republican policies - why were tariffs raised?
To limit competition from foreign imports which would be more expensive. This encouraged the purchase of American goods and helped US-based producers.
Republican policies - describe the significance of the Fordney-McCumber Tariff
1922 - raised import duties on goods coming into the USA to the highest level ever, thus protecting American industry and encouraging Americans to buy home-produced goods.
Technological change - why was the development of electricity fundamental to this advancement in technology?
It provided a cheaper, more reliable and flexible form of power for factories and other industries. It stimulated other associated electrical goods industries such as refrigerators, vacuum cleaners and radios.
New business methods - describe cartels.
A group of companies agreeing to fix output and prices in order to reduce competition and increase profits.
Consumerism - describe US homes by 1927.
2/3 of US homes had electricity - the growth of electric power encouraged a much more widespread use of electrical goods.
Consumerism - what else increased the need for electrical goods?
The growth in female employment increased the need for labour-saving devices such as washing machines and vacuum cleaners - hire purchase schemes made it easier to buy goods on credit.
Consumerism - describe wages between 1923 and 1929.
The average wage rose by 8%
Advertising - how did the technique for advertising change?
Companies hired psychologists to design campaigns and target specific groups such as young women (e.g. Lucky Strike encouraged women to smoke in public with their cigarettes marketed as ‘torches of freedom’).
Advertising - give a stat about advertising.
By 1929, companies were spending $3 billion annually on advertising, five times more than in 1914.
Credit - how many goods in the 1920s were paid for by hire purchase?
Estimated that half the goods sold in the 1920s were paid for on hire purchase.
Car industry - What had Ford introduced in 1913?
The assembly line or ‘magic belt’ - an electric conveyer belt used in factories.
In 1913, the Ford factory in Detroit was producing one car every 3 minutes. In 1920 it had dropped to 10 seconds.
Car industry - how did car manufacturing stretch out into other industries?
- It used so much steel, wood, petrol, rubber and leather that it provided jobs for more than 5 million people.
- 90% of petrol, 80% of rubber and 75% of plate glass produced in the USA was consumed by the car industry by the late 1920s.
