Why did the USA 'boom' in the 1920s
- Created by: lewisrockett
- Created on: 20-04-14 17:12
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- Why did the USA 'boom' in the 1920s?
- The Great War
- Loans repaid to USA by GB and France
- No war damage, so industry could convert to peace
- Few war casualties (16,000 living), plenty of workers
- Economies of scale/mass production
- USA producing huge amounts on production line, it lowered costs
- FORD produced masses of 'Model T' or 'Tin Lizzie'
- By 1928, there was 1 car to every 4.5 Americans
- The mass of cars had a 'knock on' effect to industry, steel, rubber, glass
- Raw Materials
- Buying oil in the US, Louisiana, Oklhoma cheaper than buying from other countries
- Cheap food produced in Prairies, consumers had money for consumer goods
- Consumer goods could buy cars, radios, fridges etc
- Large numbers of immigrants
- Immigrants came to USA from Eastern Europe and Western Europe
- Immigrants were willing to work for low wages, industry cost stays down
- Advertising/ mail order catalogues
- Consumers encouraged to spend money and 'Keep Up with the Jones'
- Department stores had catalogues
- Made consumer goods made more attractive e.g. washing machines radios, cameras
- Consumer goods were advertised on posters, newspapers, radio etc.
- Credit
- Many encouraged to buy on credit e.g. paid off in instalments
- Values of US companies pushed up
- Stockbrokers would accept a 10% deposit, called a margin
- If a nurse, invested with $100 savings, could buy $1000 dollars worth of shares 'on the margin'
- Woolworths started a share of c251 in March 1928 and it increased to c251
- If a nurse, invested with $100 savings, could buy $1000 dollars worth of shares 'on the margin'
- Many encouraged to buy on credit e.g. paid off in instalments
- Government policy on taxation and industry
- Republicans controlled the White House and Congress in 1920s
- Harding (1920-3); Coolidge (1923-9); Hoover (1929-33) believed in 'LAISSEZ FAIRE' approach to the economy
- The government would not interfere with the economy
- Taxes and firms were kept low on Americans, people had money, spend on consumer goods
- Wealthy re-invest profits in industry
- Protectionism
- Republicans put taxes on important foreign goods, encouraging people to 'Buy American'
- Other countries put taxes on their goods, huge surplus of goods that they could not consume
- Surpluses could not be sold abroad
- This is because America put tariffs on foreign goods, American businessmen found it hard to sell goods abroad
- The Great War
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