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.