Theme 2a.1: Boom and crash 1920-29 Flashcards
Why did the USA experience an economic boom in the 1920s?
-GNP rose from $73billion (1920) to $104billion (1929)
-Unemployment was low (3.7%) and inflation never rose above 1%
-US business profits increased 62% (1923-1929)
-USA outstripped rivals like Britain
What effect did mass production have on US economy?
-Henry Ford introduced production line which revolutionised car manufacture (meant low skilled workers could be employed)
-1920=8million cars, 1929=26million
-Electrification stimulated development of radios, vacuums and toasters (1929 75% of Americans had electricity)
What effect did Technological advances and their impact on leisure have on US economy?
-Development of advertising through radio and cinema
-Radio shows sponsored by corporations to advertise goods
-Mid 1930s 75% of households had radios
-Cars allowed workers to live far away from work and extra mobility (stimulated leisure industries)
-1921 Federal Highways Act (government responsibility for building roads) boosted construction industry
What effect did the automobile have on US economy?
-Car registrations increased from 8million (1920) to 28million (1929)
-Car industry employed 375,000 workers
-Demand for cars increased=Demand for steel,rubber,glass etc. (stimulated industries)
-Car ownership meant demand for more oil
What effect did hire purchase have on US economy?
-Encouraged more consumer spending
-Allowed consumers to buy goods by paying small amount of price and paying the rest monthly
-Over 75% cars bought on hire purchase
How did the government’s ‘Laissez-faire’ policy aid the economic boom?
-Republican party dominated 1920s
-Coolidge claimed ‘business of America is business’
-Aimed to lower taxes and reduce government regulation on development of business
What were some key ‘Laissez-faire’ policies?
-1922 Fordney-McCumber Tariff (taxed foreign imports to increase profits of American industries)
-Mellon adopted low tax policy for the rich and supported reduction in public spending (helped reduce US national debt)
-Anti union, after WW1 employers became part of ‘American Plan’ to reduce union power (1929 union membership declined by 1million)
How were farmers affected during the boom?
-Agriculture boomed in WW1, declined after due to demand for exports dropping
-Affected by technological advances (combine harvester) Unemployment for farmers
-McNary Haugen bill attempted to stabilise agricultural prices but failed in Congress (due to Laissez-faire dominance)
How were black Americans affected during the boom?
-Still suffered legal and social segregation (sharecroppers unable to escape poverty)
-Given low paid jobs and lived in poor quality housing
-By 1929 black Americans were engaged in manufacturing employment in large numbers for first time
