The Roaring Twenties - Economic Benefits of WWI and Reasons for Boom in the 20's

Question 1

How did WWI impact the US economy?

Answer 1

European countries were too busy fighting the war to grow food and produce industrial goods, so they had to buy their crops and goods from the U.S. This demand led to huge increases in farming and industrial production in the U.S. This growth in production during the War had an enormous positive impact on the American economy overall.

Question 2

Which products did America export to Europe during WWI?

Answer 2

1. Food
2. Fuel
3. Iron
4. Steel

Question 3

Which industries experienced expansion because of WWI?

Answer 3

1. Steel
2. Natural resources (coal, petrol, gas production)
3. Transportation (shipbuilding, railroads)
4. Consumer goods (American brands - cigarettes)

Question 4

Before Europe began to recover from WWI, how had the economy changed for farmers in the US?

Answer 4

1. crop prices had increased 25%
2. average income had increased 30%
3. tractor sales had increased
4. more farmers had borrowed money to expand their farms in order to keep up with overseas demand for their crops.

Question 5

What positive impact did WWI have on American workers?

Answer 5

1. The increased demand for industrial and agricultural goods abroad created over 1.3 million new jobs during the last two years of the war.
2. Most workers enjoyed significant wage increases.
3. There was an increase in different and better work opportunities for women and black workers.

Question 6

Even though the American economy and workforce had benefitted greatly from WWI, the end of the war created certain economic problems. List four problems:

Answer 6

1. Demand for American products dropped because with the war’s end European farming had begun to recover, and government contracts were cancelled.
2. Returning American soldiers wanted their old jobs back, so many workers (mainly women) lost their wartime jobs.
3. The increase in black workers in industrial cities caused race riots.
4. Farmers who had borrowed money to expand their farms now struggled to pay back their loans.

Question 7

What are four reasons that the U.S. experienced an economic boom after 1922?

Answer 7

1. New methods that allowed faster production.
2. The availability of credit to buy new goods.
3. Advertising that encouraged people to buy.
4. Increased popularity of investing in the stock market.

Question 8

How did Mass Production techniques in the car industry help the American economy to boom?

Answer 8

Mass production techniques made it possible to build many more cars per day, which caused a tremendous drop in the price of cars. More people could now afford cars, so this created a huge increase in the demand for cars, which in turn increased the demand for the steel, rubber, glass and textile products needed to make all the cars.

Question 9

What were the key innovations of Henry Ford’s production line?

Answer 9

There was a conveyor belt, with workers specialising in a certain step in the production process. It was efficient as workers were more skilled at one task and saved time between changing tools and parts. 1913 - one car every 3 minutes 1920 - one car every 10 seconds

Question 10

How did Hire Purchase contribute to the U.S. economic boom in the 1920’s?

Answer 10

Hire Purchase enabled ordinary consumers to buy expensive products they wanted without having to save up for them. By renting the product, they could get it now, and pay for it in monthly instalments. The item became theirs when they finished paying off the purchase price in full.

Since more people could now afford to buy things, demand rose and factories continued to produce. This increased production contributed to the economic boom in the U.S. in the 1920’s.

Question 11

How did Advertising and Consumerism contribute to the U.S. economic boom in the 1920’s?

Answer 11

Advertisers actively bombarded consumers in mass media campaigns to change buying habits and to create new markets for their products.

Consumerism worked to create a culture of buying, so that shopping became a leisure activity. People started buying things that they did not even need.

Marketing and advertising companies used different media to sell their message to consumers. Examples include: posters, newspapers, magazines and radio broadcasts.

Since people began to listen to advertisements and buy more, demand for products rose, which also caused more production. This increase in production contributed to the economic boom in the 1920’s.

Question 12

How many refrigerators were sold in the U.S. in 1921, and how many were sold in 1929?

Answer 12

In 1921, 5000 refrigerators were sold in the U.S. By 1929, 1 million refrigerators were sold.

Question 13

Which industries boomed?

Answer 13

Construction - greater demand for buildings Transport - the road network in the US doubled by 1930 and number of trucks tripled. Department stores - grew with consumerism, first supermarket chain in the world was Piggly Wiggly.

Question 14

Why did the stock market boom?

Answer 14

>Companies rose in value from consumerism

>Banks offered low interest rates so people turned to the stock market to increase the yield on their money.

>Speculation led to increases in share prices

Question 15

How did the Stock Market boom contribute to the overall economic boom in the 1920’s?

Answer 15

As more people invested in publicly traded companies, those companies had more and more money available to them. The companies hired more people, who then had more money to spend, which contributed to the economic boom in the US economy.

Question 16

Define “buying on margin”

Answer 16

Where stocks are brought with borrowed money by investors. This led to wild speculations in the stock market increasing stock prices. 1929-investors borrowed $8.5 billion to buy stocks.