The economic boom in the 1920s in the USA

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THE USA: How far did the US Economy boom in the 1920s?
On what factors was the economic boom based?
Industrial Strength:
USA was a huge country and had many natural resources: oil, coal, iron, gas, textile industries
­ didn't need to import many raw materials.
Growing population.
Home market large and growing.
By First World War ­ USA led the world in most areas of industry.
Leading oil producer, massive steel, coal, oil and textile industries.
Developing new technology ­ motor cars, telephones, electric lighting.
Chemical industry.
Film industry.
Managers ­ skilled and professional ­ selling products worldwide.
Agriculture ­ effective and productive ­ farmers over-producing crops ­ actually a very
serious problem.
World War One:
USA had tried to stay out of most of the fighting during the First World War ­ but there was a
big market in Europe for arms, munitions and food, and they lent the Allies money.
This one-way trade was hugely useful in boosting American industry.
Industry in places such as Britain, France and Germany was in decline ­ and exportations had
to be stopped, so America took the opportunity to take over their trade.
Germany had been leading the chemical industry before the war ­ the USA soon took them
over ­ benefited economy.
New materials such as plastics were produced during the war, and some of the products
manufactured for the war led to the production of a range of products which became new
industries in America.
People more willing to spend a lot of money ­ worried that there would be another war
which they wouldn't survive ­ `seize the day'.
USA only entered the war in 1917 ­ exited it virtually unharmed - other countries' industries
in decline but the American economy was benefiting.
Republican Policies:
Republicans dominated congress ­ presidents in place from 1920-1932.
Their policies contributed to the boom.
Government shouldn't interfere with the industries.
Leave the businessman to do his job ­ he knew best.
Where prosperity came from.
Taxes on imported goods.
Protected business against foreign competition.
Allowed American companies to grow rapidly.
As imported goods were more expensive due to the tariffs people would be
encouraged to buy the less expensive American goods.

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Low Taxation:
Brought some benefits to working class people BUT benefited the wealthy more.
People keep their own money ­ spend it on American goods and the wealthy would
invest it in industries.
Super-huge corporations which dominated industry.
Some believed it was unhealthy for one man to have almost complete control of a sector
of industry.
Republicans believed that the `captains of industry' knew what was best for the USA
more than the politicians did.…read more

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Total US farm income dropped by $9 billion to $13 billion from 1919 to 1928.
Post-war: less market for food in Europe ­ they are poor and don't want to import goods
from the USA if they have no market in the USA for their goods due to tariffs.
Competition from highly efficient Canadian wheat producers.
Population in the US falling ­ less market at home.
Overproduction ­ more and more land being farmed ­ improved machinery (e.g.…read more


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