Revision Notes - the USA in the 1920s and 30s.

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History Unit 2

Economy in the 1920s

The world in 1919

The USA had become very independent, with its new policy of isolationism, so it did not join the league of nations or any other country's affairs. Treaty of Versailles had been put in place for Germany. USA profited from the war hugely, since they sold weapons to Europe during the war, and they start to sell Europe large amounts of food. While a lot of Americans were killed, it was less than other countries, and they manage to get over the war quickly.

Why did the USA boom?

  • Impact of WW1 on Europe-The war was fought in Europe, and not in USA, meaning that Europe had been badly damaged. Many were killed, and needed to import lots from USA
  • Impact of WW1 on USA-The lower European export levels meant that there was a gap in the market that the USA was ready to fill, helping with the booming economy. They supplied Europe with weapons during the war, and food afterwards, giving them huge profits
  • Effect of impact of WW1 for USA-Europe was devastated, and needed supplies from USA, gaining USA sizable profits
  • Industrial strength-USA had high exports and low imports, meaning that they profited hugely. They had a large amounts of natural resources, like oil in Texas, coal in Kentucky, and Iron in Chicago
  • New ideas and industries-Henry Ford owned Ford, who were one of the leading car manufacturers. He introduced many new ideas, like standardisation, and mass production. This created a prosperity cycle. Electricity became more widespread, so more electrical appliances could be manufactured.
  • Prosperity cycle-As more jobs were made available for people, there was more money going around, since more people would be buying goods, increasing demand, which requires more jobs. Another on is that Cars started to become made, which required parts, which boosted older industries like Steel and glass, giving more people jobs, so more cars were bought, increasing demand. Cars also created new opportunities, like motels, more roads, and petrol stations.
  • Mass Production-Standardisation, so all parts were the same. Division of labour split up the work, so that one person would do the same specific job, and moving assembly lines meant that a conveyor belt carries products to the workers.
  • Confidence-Americans felt very confident, meaning they would be more willing to spend their money. Hire purchases-borrowing money to buy goods. Americans also felt confident in investing in the stock market.

Republican Policies

  • Low Taxes-People did not have to spend all of their money on taxes, and could spend their money on other things
  • Laissez Faire-The government did not interfere with people's lives
  • Rugged Individualism-First used by Hoover, meant that people achieved their own success through their own hard work.
  • Tariffs-Taxes put onto imported goods, so Americans had to buy American goods-May 1921 Emergency Tariff Act-Increased tax on imported wheat, sugar, meat, wool, etc
  • Immigration Restriction-Before WW1, there were practically no immigration restrictions, but afterwards the government decided to 'keep America American'-1921 Emergency Quota Act restricted immigration to 3% of the number of immigrants in 1910
  • Election slogan-Hoover promised 'A chicken in every pot, a car in every backyard'

Growth of Industry

  • Construction-New materials allowed construction of new, taller buildings. More homes built in suburbs as the transport was better, so people could get into work from further away. Economic growth required more buildings to be built, like department stores, factories, etc.
  • Electricals-Grew very rapidly, and many homes had electricity by 1929. Better technology allowed this growth. Encouraged development of new goods, like vacuum cleaners, radios, washing machines, etc. All these new products required more advertising to sell well.
  • Transport-Car industry was boosted greatly, with Henry Ford's new ideas. New transport required more roads to be built. One car a minute at ford in 1929. More vehicles=More parts needed=Older industry boosted. Air travel boosted-162,000 flights in 1929.
  • Advertising-More firms realised the potential of advertising, making it become more important. More sophisticated advertisement methods, with colour and they became more memorable. Cleaning the home was easier(new technology) so women had more time, so more advertisement was aimed at them. More department stores meant more advertising used.
  • Department Stores-More consumerism, so more demand for department stores. Electrical appliances meant there were more available products, so more of a reason for them to exist. Better construction allowed them to be bigger. JC Penney opened Piggly Wiggly (supermarket). Allowed people to get all products in the same place. Customers served themselves as opposed to waiting to be served.

What industries suffered?

  • Coal industry-More people had cars, so there was less demand for railway, so coal was used less for this. Oil and its derivatives were becoming used more and more, and coal less and less. Coal no longer used in factories-competition from gas and electricity
  • Railroad Industry-More people had cars, so people no longer required railroads. Coal industry suffered, so it could not be used for steam strains. Cheaper ownership of cars, so petrol was cheap
  • Textile Industry-Tariffs on foreign wool and cotton was less, so there was increased competition. Rayon was a new manmade fibre that was cheaper than other textiles-required less processing and fewer workers. Women's dresses became shorter after WW1, so less material was required to make dresses-7m material was required in 1928, but 21 was required before ww1
  • Agriculture-Overproduction. At the end of the war, Europe needed food supplies from USA, so they supplied it. Farmers noticed that they could sell tons to Europe, so expanded. This meant that when Europe recovered, there was a surplus of food, so farmers got practically no money. Farmers invested greatly in farming equipment, and took a lot of loans, that they could not pay back. Minary-Haugen Farm Relief Bill introduced by congress to help farmers(set up federal farm board to buy and store agricultural products at 1914 prices), but President Coolidge vetoed it. Increased competition from Canada, Argentina, and Australia.
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Society in the 1920s


  • Consumerism was practically nonexistent before the 1920s-very few luxuries, a lack of advertising, and everything was aimed at men.
  • In the 1920s, people had more money, and women had more free time, due to new technologies. Women were used in adverts as it appealed to both men and women. Fridges could be used to keep food cool, so you didn't have to go to the shop every single day to buy more food. Branding becomes more important.

Prohibition and Crime

  • Prohibition-when something is banned, or stopped from happening. The USA government ...

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