Laissez Faire-- Means 'leave alone'.
Republicans believed that if the
government didn't interfere with
people's lives and businesses then
they would be free to make money
Tariffs-- Taxes placed on
imported foreign goods to
make them more expensive,
which forced Americans to
buy American goods.
American companies
increased their sales
Low Taxes-- so people had
more money to spend on
American goods, therefore
helping the economy grow.
Encouraged to build the development of
large trusts-- Big companies which
dominated a market eg. Rockefeller-oil. Big
businesses boomed under the republican
policies
Ford and the motor industry
In order to make his cars more quickly
and cheaply, Henry Ford needed a new
method of production; The moving
assembly line. An electric conveyer
would bring the parts to the workers
(who always stood in the same place)
who would be responsible for one area.
By 1925, 500000 people worked
in the motor industry
First used in detroit.
A car was produced in
one-tenth of the time
previously taken. (From
14hrs to 93 minutes)
Model T Ford- 15
million made
between
1908-1925.
1928, Model T cost $295,
three months wages for
the average worker.
By 1925, 500000 people
worked in the motor
industry and by 1929, 4
million people's jobs
were linked to it.
Car production used up
20% of America's steel,
80% of her rubber, 75%
of her plate glass and
65% of her leather
By the end of the 1920s,
American cars used
seven billion gallons of
petrol a year. This
helped to create jobs in
the oil industry and
made the oil state of
Texas rich.
Jobs were available in
road building, hotels,
garages, roadside
restaurants ect.
Consumer goods -
mass production
1916 only 15% of
Americans had electricity
- 70% had it by 1927
This encouraged
Americans to buy newly
invented gadgets -
fridges, vacuum
cleaners, telephones ect.
Huge demand for these goods
create jobs in the factories that
created them. These newly
employed people had more money
so they could buy new consumer
goods.
THE CYCLE
OF
PROSPERITY
Advertising
New methods were
created to sell these
consumer goods -
Advertising
These adverts were
placed on billboards
and put into
newspapers and
magazines
Mail order catalogues were
sent out for those who didn't
live near big stores while
cinema and radio played
adverts too
Famous slogan -
'Keeping up with the
Joneses'. 1927 -
companies spent
$1.5 billion on
advertising
Hire Purchase
Americans felt so confident that in the
1920s they started to borrow money to
buy goods. Companies increasingly
offered 'Hire Purchase' - being able to
pay for good by instalments.
You did not have enough money to buy a
product outright - you only had to pay a
little bit each week or month - poorer
people could now buy products. This
increased sales massively. More demand
meant more goods, which then meant
more jobs.
8/10 radios and 6/10
cars were bought on
hire purchase/
Stock market and
share purchase
Many people bought shares in
companies as investments - they
would get a dividend (share of the
profits) each year.
Increased demand
meant the share price
went up - a 'bull'
market.
People thought the value of shares would continue
to increase. They even borrowed money from banks
to buy shares - buying shares 'on the margin'. They
used their houses to guarantee the loan and sold to
buy shares soon after purchase to make a profit and
pay back the loan. People now had more money to
spend on American products.
Banks were lending more
money than they actually
had, confident loans would
be paid back before
customers wanted to
withdraw their savings.
Banks were also buying
shares to make money.
Share prices increased during the 1920s on
average by 300 percent. 1920 - 4 million
Americans owned shares, 1929 - 20 million.
Companies got money from shares to invest
and expand their business.