why did america boom in the 1920s?

Why did America boom in the 1920s?

A very brief set of notes…

Why did America boom in the 1920s?

This presentation will look at 3 main areas:

• What is an economic boom?• Why did it happen?• Did everyone benefit from it?

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What is an economic boom? Why did it happen? Did everyone benefit?

What is an economic boom?

• A rapid growth in a country’s money making that leads to increased prosperity (wealth).

• The economic boom in America was based around consumer goods – luxury items that people wanted to buy but didn’t really need.


Examples of consumer goods

Cars 9 million in1919

26 million in 1929

Radios 60,000 in 1920

10 million in 1929

Telephones 10 million in 1915

20 million in 1930

Other consumer goods included: nylon stockings and fridges


Why did America boom?

• Industrial Strength• World War One• New Ideas and Industries• Republican Policies• Confidence


Industrial Strength

America had large natural resources:• Oil – Texas• Coal – Kentucky• Iron – ChicagoAmerica had good agriculture (farming):• Cattle ranching – Colorado


World War One

• American industry had profited by selling war goods to Britain and France

• The disruption to British and French industry allowed America to become the world’s leading exporter

• America only joined the war in 1917 so had not suffered so badly – in contrast, by 1918 Britain owed the USA £900 million.


New Ideas and Industries


The 1920s saw a dramatic change in American industry, for example:

• Henry Ford ran the Ford Motor Company. It made the most famous car of the 1920s the Model ‘T’ Ford.

• It was slow, ugly and nick named the ‘Tin Lizzie’. • However, by 1929 they were making more than 1 car a minute

at the Red River plant. It was successful because it was cheap.• Mass Production – every part was standardised (only one colour

and choice of engine), the cars were put together on a production line. The cars were moved along while workers did simple repetitive tasks, for example you might put on wheels all day. This unskilled workers could be paid less.

• Mass production was cheap and quick.

Cycle of Prosperity


More cars were made

More parts were needed

Other industries grew

More people had

jobs

New opportunities

motels

road building

petrol stations

steel

glass

leather

rubber

Republican Policies

• Laissez Faire – French phrase meaning leave to do. Republicans believed that if government did not interfere in people’s lives then they would be free to make money.

• Tariffs – taxes placed on imported goods so that there was less competition for US businesses

• Low Taxes – so people had more money to spend, for example on consumer goods. Republicans believed this would help the economy grow.

• Trusts – large companies were allowed to control whole industries. For example, Carnegie controlled the steel industry. It was believed that this would lead to them becoming more successful and efficient.

To be President in the 1920s was to be a Republican. Some of the policies followed by Harding, Coolidge and Hoover were:


ConfidenceAll of these factors (reasons) helped make Americans feel more confident. This confidence led them to spend more, which in turn made the economy grow even faster.

Americans in the 1920s were confident enough to start borrowing money to buy goods. Companies increasingly offered ‘hire purchase’ where consumers could ‘buy now, pay later’. For example, you could hire a car for a long period of time, once you had paid enough money the car would become yours.


Did everyone benefit from the boom?

The simple answer is no. In the 1920s nearly half of all Americans lived in rural areas (the countryside). During this time agriculture (farming) was actually suffering.

Farm Incomes dropped from: $22 billion in 1919 to $13 billion in 1928

There were several reasons for this:•Tariffs reduced trade with other countries•World War One meant that Europe couldn’t afford American food exports•Canadian wheat producers were growing more grain•Over production made prices fall.•Dustbowl – over farming led to some areas in the mid west to become unusable desert.

As a result, millions left for the cities. For the first time, more Americans were living in cities than in the countryside.


Did everyone benefit from the boom?

The booming American economy in the 1920s led President Hoover to say:


“we in America today are nearer to the final triumph over poverty than ever before in the history of any land”

10% 32%$

But there was still great inequality. 32% of the wealth went to the richest 5% of people. Only 10% of wealth went to the poorest 42% of people. Therefore, nearly half of all Americans were too poor to take part in this consumer good based boom.

why did america boom in the 1920s?

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