Reasons for economic prosperity- 1920s America

Industrial Strength

• The USA:
• Was rich in natural resources (oil, gas, coal and iron) - it lead the rorld in most areas of industry in WW1.
• Had huge steel, coal, and textile industries.
• Was the leading oil producer.
• Was developing new technology (cars, telephones, and electric lighting).
• Had fast-growing newer industries (such as chemical industry).
• NHad nw industries that emerged during/after WW1 in response to the war.
• Went through a "Second Industrial Revolution" was based on oil and electricity.- leading to growth of the chemical, cnstruction, communications, and electricity industries.
• 63% of American homes had electricity by 1927- leading to a boom in labour-saving devices (such as vacuum cleaners, refrigerators, and washing machines).
• Its new film industry led the world.
• American agriculture became the most efficient and productive in the world.

The First World War

• Helped American industries to expland- goods (such as arms, munitions, and foodstuffs) were exported to Britian and France.
• The USA was able to take over Britihs and French trade.
• American exports controlled by European colonial powers increased during the war.
• They were not involved in the war long enough to drain their resources in the way it drained Europe's.

Republican Government Policies

• From 1920-1932 all US Presidents were Republicans. They beliebed in:
• Laissez-faire: they didn't get involved in the affairs of businesses but they did help businesses to prosper.
• Tariffs: high import tariffs made foreign good more expensive, and so boosted sales of American-made goods- Fordney McCumber tariff Act of 1922 added 33% to import prices., which backfired as foreign countries increased tariffs on American goods and world trade declined.
• Low taxation: taxes were cut on high incomes so people had more money to spendon consumer goods. Taxes on company profiits were low, allowing businesses to invest in new factories and buildings.
• Credit was encouraged.
• "The business of America is business"- Calvin Coolidge, President 1932-1929
• During Coolidge's presidency business boomed and america became the richest country in the world.

Mass Production

• Increased the number of good produced and lowered their prices (10% drop in prices from 1924-1929).
• This lead to an increase in the construction of factories, which created more jobs.
• For example, the car industry
• Henry Ford transformed this industry.
• He made cars on a production line.
• This increased the number of cars produced.
• In 1900 only 4000 cars were produced each year.
• By 1929, 4.8 million cars were produced each year.
• It helped reduce assembly time from 12.5 hours to 1.5 hours in 1914- by 1925, Ford produced a car every 10 seconds.
• In 1909 a Model T Ford cost $1200, but by 1928 ir only cost $295.
• From 1908-1927 over 50% of cars sold in the USA were Fords.
• By 1928, 20%of all Americans owned cars.
• Ford's slogan was "you can have any colour you like as logn as it is black".
• Ford raised the minimum wage from $5 a day (more than twice the usual wage).
• He also reduced the working day from 9 to 8 hours.
• This resulted in people flocking to Ford plants in search of a job.
• 1 in 5 Americans owned a car by the end of the decade.
• in 1920 there were 9 milion cars in the USA, and by 1929 there were 26 million more.
• Almost 500,000 wokers were employed in the car industry.

The Car Industry

• Car-making used up:
• 20% of American steel.
• 80% of American glass.
• 65% of American leather.
• 7 billion gallons of petrol was used a year- which made the oil producers of Texas rich.
• New roads were built, which resulted in more jobs in the construction industry.
• Road building doubled from 1920-1929.
• Thousands of garages, restaurants, motels etc, sprang up along the new roads, all providing more jobs.
• However, the increasing number of cars also had negative effects, such as:
• Congestion.
• Pollution
• Car crashes
• Lack of job satisfaction from "boring and unrewarding" work on the assembly line.

Boom In Construction

• More offices and factories were built as a result of economic growth.
• More houses, schools, and hospitals were also built.
• The skyline was transformed bybthe building of skyscrapers.
• New estates were built in the suburbs.
• People could travel further for work due to the availability of cars.
• Road construction was the buggest employer in the 1920s.

Mass Consumption: Role of Advertising

• Mass production required a mass market. This led to a rapid growth in advertising.
• In 1914 $250 was spent on advertising in magazines.
• This doubled in 1919.
• This had reached $3 billion by 1929.
• New methods of advertising also emerged.
• Radio and cinema.
• Trevelling salesmen demonstrated new products in people's homes and in shops.
• There was an expansion of hire purchase schemes.
• 75% of radios and more than 50% of cars were bought this way.

Growth in the Stock Market

• Many people bought shares and made significant profits.
• Credit and hire purchase schemes meant that more goods could be bought by putting down a small payment.
• This increased sales.
• Mail order also increased sales of goods in rural areas.
• New industries such as car production and electrical goods saw a boom i this time.
• For those who benefitted, life was getting better and better.

The Stock Market

• Confidence spread through America at this time, encouraging pepl to buy goods and invest in American businesses.
• The buying and selling of stocks and shares boomed- people expected businesses to continue to grow.
• Specultaion on the Stock Market increased rapidly, as it was a wuick and easy way to get rich.
• In 1920 there were 4 million share owners in America.
• By 1929 there were 20 million (out of a population of 120 million)- about 1.5 million were big investors.
• Around 600,000 new investors were speculators - they did not expect to hold theirbshares for long.
• A person only needed to set down a 10% deposit to buy shares ('on the margin')- the rest was borrowed from the banks.
• Banks therefore encouraged speculation.
• 1928:
• Demand for shares was at an all time high.
• Herbert Hoover (President) stated "we in america today are nearer to the final triumph over poverty than ever before in the history of mankind".
• A few months later the stock market crashed.

Groups that didn't share in the prosperity

• Many Americans continued to live in poverty.
• 60% of all Americans lived just above the poverty line.
• Groups who suffered particularly badly were:
• African-Americans.
• Immigrants.
• Women.
• Small farmers.
• Coal miners.
• Old industry workers.

Farmers

• Many farmers lived in poverty:
• No electricity.
• No running water.
• No toilets.
• Approximately 600,000 farmers lost their farms in 1924
• By 1930 about 1 million people left their land- either voluntarily or through eviction.
• Labourers also lost their jobs.
• Total US income dropped from $22 billion (1919) to $13 billion (1928)

Why did farmers struggle?

• The war was a boom time- many farmers took out loans to buy new machinery to meet demand.
• After the war European countries stopped buying American produce.
• Farmers in the southern states were particularly effected.
• High European tariffs on American products (in retaliation to the Fordney McCumber Act (1922) and the Hawley-Smoot Tariff Act (1929))
• New machinery produced too much food, causing prices to fall further.
• Many farmers couldn't afford repayments on their mortgages and loans- leading to eviction from their.
• Wheat prices fell- 233 cents per bushel (1920), 32 cents (1932).

African Americans

• 3 million black people lived in the southern states.
• They were forced to do menial labour for very low wages.
• They lived in total poverty.
• They were still treated as second-class citizens eventhough slavery had been abolished in 1865.
• Most lived in rural slums and worked long hours on tobacco and cotton plantations.
• Southern laws discriminated against black people- segregation and voting bans.
• They received poor education, jobs and housing.
• Lynchings, beatings, brandings and tarrings were common (many carried out by the KKK)
• Between 1918 and 1927, 416 black Americans were lynched.
• The north was more mixed.
• Some had better jobs, the chance to go to university, became middle class, had their own businesses and became jazz singers (thus earning good money).

Workers in "old industries"

• Coalmines closed as people began using new forms of power- gas, oil and electricity.
• Textile factories closed as the demand for cotton and wool fell with the introduction of manmade fibres such as rayon.
• Open factories paid workers low wages and provided poor conditions.
• North Carolina- coal workers went on strike over poor wages and conditions.
• The men were paid $18 for a 70 hour week.
• Women were paid $9 for a 70 hour week.
• $48 a week was considered to be the minimum for a decent life.
• In some places child labour was still used.
• Labour unions were not effective on campaigning for better conditions.
• Strikes were violently dealt with by police.
• Around 5 million Americans were unemployed during the decade.
• The unemployed often included poor whites, black, Hispanic and immigrants.