A2 History: American economy 1917-1929

WORLD WAR ONE (1914-1918)
1. 1917: Woodrow Wilson made the decision for the U.S to enter
  1. previously involved: allies/trade links (GB + FR)
  2. POSITIVES INTERNATIONALLY > INTERNALLY
    1. BENEFITS
      1. Economic propserity
        1912-1916: trade increased from $2bil to $6bil in value
        New York became the financial capital
        39% industrial growth 1916-1918
        1.3 new million jobs created
        unemployment near 0%
        real wages grew 20%
        working conditions improved, unions strengthened
      2. European trade links
        went from a debtor to a creditor
        $10bil in assets abroad
        By 1918, loaned $11.2bil to allies
    2. NEGATIVES
      1. SELECTIVE SERVICE ACT 1914: demanded conscription
      2. 112,500 died in battle
      3. 16th ammendment gave congress the power to levy taxes
      4. LIBERTY BONDS: allowed the government to borrow from the population, to then trade bonds as they see fit- TENSIONS
      5. ESPIONAGE ACT AND SEDITION ACT restricted personal freedoms
      6. extreme patriotism led to intolerance of immigrants
        anti-German feel aided propaganda movements
      7. temporary introduction of prohibition led to decreased trade
2. 1917: ESPIONAGE ACT- fines and imprisonment for interfering with the recruitment of troops
3. prohibition first introduced for the duration of the war
  1. purchasing alcohol was seen as aiding German war efforts
    1. Germans: big alcohol producers
4. 1918: SEDITION ACT- extended ESPIONAGE ACT to cover a broader range of offences
  1. including expressing negative opinions of the war efforts
PRE 1917 CONTEXT
1. US had the largest economy
2. CIVIL WAR (1860's) sought to abolish slavery, SOUTH were against it, NORTH won
  1. ethnic neighbourhoods emerged (enclaves)
  2. racial tensions
  3. economic prosperity
  4. democratic popularity
  5. population doubled
  6. pull factors
3. transport development
MOTOR INDUSTRY
1. FORD
  1. Model T
    1. durable, all black,reliable, cheap to make
    2. made motors a necessary good, no longer a luxary
    3. upon the introduction of the assembly line, production costs reduced from $900-$500
  2. economies of scale, division of labour, specialisation,
  3. ASSEMBLY LINE
    1. quicker production, specialisation
    2. 1920: 1.25mil cars produced p/a
    3. 1925: 1 car produced every 10 seconds
    4. 1929: 7% of all employed worked in the motor industry
      1. temporarily closed a plant in Detroit to retool for a new plant (model A) laying off 60,000 workers, contributing to a short recession
      2. began to lose his market, competetitors showed variety, comfort and style
  4. 24hr days
    1. 3rd shift
  5. FORDISM: mass production, selling in bulk
    1. supply always exceeded demand, Ford was slow to learn, wasted goods and supply
  6. Henry Ford
2. Ford, Chrysler, General Motors
  1. difficult for independent companies to survive unless they produced specialised goods for the 3 main companies
3. automobile revolution
4. Detroit, motor city (MO TOWN)
5. replaced horse drawn carriages
6. FEDERAL HIGHWAY ACT (1921) gave the responsibility of road building to the central government
  1. rate of 10,000 miles of road p/a by 1929
  2. in 1920, only 1% of 3 mil miles of road were suitable for cars
  3. 23mil cars on the road by 1929
  4. vital links for business
7. IMPACTS
  1. ECONOMY PROSPERED
    1. increased trade
    2. employment
    3. change in infrastructure
    4. new industry
    5. living standards
    6. American dream
    7. fast production
  2. CHANGE IN LAND USE
    1. roads suffered
    2. trucks
    3. population movements
    4. suburbs
    5. motels
    6. road deaths 20,000 p/a during 1920s
  3. CULTURE CHANGE
    1. leisure
    2. commuting
    3. dropped church attendance
    4. taxi services
    5. social leveller
CONSUMERISM
1. people increasingly living in urban areas, census designated any areas with a population less than 2,500 an urban area
2. large cities rapidly growing
  1. New York: >5mil
  2. Chicago topped 2mil
3. 15% people living in a city with a greater population than 0.5mil
4. cities were increasingly becoming home to black americans
  1. migrated from the South, to places such as Harlem
  2. in the 1920s, over 118,000 white Americans left Harlem and over 87,000 black Americans arrived
5. between 1920 and 1930 families with...
  1. inside flush toilets rose from 20% to 50%
  2. central heating rose 41&
  3. electric lighting rose from 35% to 68%
INVESTMENT AND THE STOCK MARKET
1. Speculation
  1. looking at patterns of shares, selling if the speculation is a loss, investing further if its going to be a gain
  2. viewed as a get rich quick scheme
    1. risky
2. on average, company profits increased by 80% in the US
3. Dividends were a bonus for shareholders
  1. increased to 65%
4. appealled to desperate people who were struggling
5. shares bought on the margin required a 10% deposit and a bank loan
  1. PROBLEM!!! Only enhanced the debt and struggle
6. Stockbrokers
  1. 1919: $3.5bil
  2. 1929: $8.5bil
  3. Loans in value
7. encouraged investment, gained people money in the short term
  1. risky
  2. lost people money both in the short term and in the long term
  3. made an unpredictable economy more tumultous

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A2 History: American economy 1917-1929

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