USA: 1919 1941 Revision Notes

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USA: 1919 – 1941

Start of economic boom:

  • Cheap labour force due to continuous immigration pre WWI, including unskilled labour
  • Onset of WWI and America’s late entry

Reaction to WWI & After:

  • Set up the League of Nations, but did not join and chose to follow an isolationist policy
  • Entered late into the war so therefore had a plentiful supply of goods, and no physical damage on American soil
  • Availability of natural resources e.g. oil, coal, wood, iron
  • Sold supplies to fighting countries during the war, as well as loans
  • Economies in Europe were struggling to rebuild, allowing America to take over as the world’s largest producer of products such as fertilisers
  • Technological advances made: mechanisation, creation of plastic

Economic Management:

  • Limited government intervention ‘laissez-faire’, with low taxes & few regulations encouraged economic growth in businesses
  • ‘Rugged individualism’, belief that people succeeded with their own hard work
  • Tariffs introduced to protect the US economy: import duties on goods to the USA, along with a reduction in income tax rates to allow people to spend more on American goods
  • Introduction of new production methods: the conveyor belt, which sped up production rates and increased profits
  • New materials introduced such as plastics and glass, helping create buildings such as skyscrapers
  • Wages increased along with profits, more people could spend more on consumer luxuries
  • Electrical power made widespread, usage of oil doubled
  • People were confident and now prepared to buy American goods and invest in the American economy
  • Prosperity was a right, not a privilege: people encouraged to spend

Return to isolationism:

  • The US economy was increasingly protected by government intervention in the forms of tariffs
  • Quota system for immigration, closing the ‘Open Doors’ policy

The Boom & Industries that benefited: Motor industry, building works, stock market

  • Advertising increased massively to fuel consumerism
  • Low inflation, low unemployment, low interest rates meant that people could afford to buy luxuries 
  • Hire purchase introduced to allow average earners to spend on luxuries
  • Stock market share prices rose steadily during the 1920s, until in 1928 where it suddenly rocketed
  • Beginning of speculation, people willing to buy shares using loans
  • Motor industry: Car production relied on other industries such as steel, petrol, glass and rubber
  • Techniques such as the assembly line lowered costs of production, making cars more affordable
  • Increase in purchase of cars led to more roads being built, as well as hotels/restaurants which were now reachable
  • Construction industry similarly benefited from the introduction of new materials, as well as greater demand for factories, buildings etc.
  • Transport services as more was invested into infrastructure such as roads, allowing buses to become common, as well as commercial flights
  • Introduction of department stores, where people helped themselves to goods
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Suffering industries: Coal, Railway, Textiles (Cotton/wool), Agriculture

  • Old industries’ such as coal mining began to be in competition with oil
  • Cars began to take over the railway transport system, lessening the need for coal
  • Advancement in technology meant less workers were needed for mining -> unemployment begins
  • Mines began to close down
  • Textiles industries began to face competition when tariffs were lowered
  • New materials such as rayon meant that old textiles fell out of favour in terms of cost and efficiency in production
  • Changes in fashion (short dresses etc.) meant less textiles ...

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