"American Economic Boom"
Why did America boom in the 1920s? A very brief set of notes… What is an economic boom? Why did it happen? Did everyone benefit? 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? To return to the start click the logo. 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. What is an economic boom? Why did it happen? Did everyone benefit? Examples of consumer goods Cars 9 million in 26 million in 1919 1929 Radios 60,000 in 10 million in 1920 1929 Telephones 10 million in 20 million in 1915 1930 Other consumer goods included: nylon stockings and fridges What is an economic boom? Why did it happen? Did everyone benefit? Why did America boom? • Industrial Strength • World War One • New Ideas and Industries • Republican Policies • Confidence What is an economic boom? Why did it happen? Did everyone benefit? Industrial Strength America had large natural resources: • Oil – Texas • Coal – Kentucky • Iron – Chicago America had good agriculture (farming): • Cattle ranching – Colorado What is an economic boom? Why did it happen? Did everyone benefit? 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. What is an economic boom? Why did it happen? Did everyone benefit? 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. What is an economic boom? Why did it happen? Did everyone benefit? Cycle of Prosperity More cars were made petrol More parts stations were needed New motels opportunities steel road Other industries building glass grew More leather people had jobs rubber What is an economic boom? Why did it happen? Did everyone benefit? Republican Policies To be President in the 1920s was to be a Republican. Some of the policies followed by Harding, Coolidge and Hoover were: • 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. What is an economic boom? Why did it happen? Did everyone benefit? Confidence All 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. What is an economic boom? Why did it happen? Did everyone benefit? 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. What is an economic boom? Why did it happen? Did everyone benefit? 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.