USA entered the war late and gained from it, the economy boomed as the USA exported weapons and food to Europe during the war. The damaged countries bought American goods with the help of American loans.
American businesses were worried about the produce of European goods as it mean't less American people would buy more expensive American goods.
Harding introduced tariffs which is tax on imported and exported goods so Euporean goods were more expensive. He wanted to prtect America from 'unfair' European competition.
Before WW1, America let almost anyone into their country to live in. But increased immigration mean't that America was restricted to amount they let in. WASP's were the most powerful group in USA at the time and they believed many were trying to take over the USA. Annual immigration was reduced from over a million to 150,000.
Prosperity in the 1920's
1920's. This was a 'boom time' for many - incomes rose and stardard of living improved. There was a consumer boom, more people could afford items such as radios, washing machines and telephones. Advertising encouraged more spending like radio and film commercials. Hire purchase was introduced to make cars more affordable. The government also reduced the tax which left people with more money.
- Prosperity cycle - Mass production means goods can be cheap
More people can afford to buy
Hire purchase helps people buy goods
Adevertising gets people interested
More people are employed to make these goods
People spend their wages on more goods.
1.5 mil Americans bought shares in the 1920's. Before the price of shares began to rocket unrealistically in 1928, there were sensible reasons for buying them - people were investing in a readl boom in production and comsumption. It only went bad when people took to buying shares on credit in the hope of selling them as profit.
The jobs of 1 in 12 workers were linked to motor car production.
Car production boosted other industry like steel, petrol and glass.
Cars became more affordable through mass production, Model T Ford cost less than 300.
Big three companies - Ford, Chrysler and General motors. Ford used an assembly line system, it made production more efficient and cheaper. There was a car for every 1 in 5 Americans.
Poverty in the 1920's
Wealth wasn't distributed evenly - there was a big gap between rich and poor in the USA.
Poverty in Urban areas - Some industries kept wages low and prices high so workers didn't receive much.
Many African Americans had moved from south to north to work but they were often restricted by prejudice and poverty to living in poor districts.
Too many people in Urban areas.
Old industries suffered - The coal industry suffered because of the competition with oil. Cars and trucks took over from the railways and so less coal was needed. People lost jobs as more advanced technology was used to get coal.
Cotton boom collapsed as a bug destroyed 30% of the crop.
Agriculture led to rural poverty - Overproduction of food led to falling prices. Taxes and mortgages were rising and more competiton was around. The government didn't believe in direct help for farmers and so the farm population began to shrink.
Intolerance in the 1920's (racism)
Prejudice against immigrants led to the red scare.
In 1919 the authorities used a series of bombings across the country to whip up a 'red scare'. They deported over 4000 people, mainly russians. During the 'red scare', two italian anarchists called Nicola Sacco and Bartolomeo Vanzetti were convicted of murder and robbery. there were protests by people who argued it was a miscarriage of justice but they were executed in 1927.
Literacy tests were used to pick out the best immigrants and a quota system was set up which was replaced by the National origins Act which strictly limited immigration. This act discriminated against southern and eastern europeans.
Ku Kulx Klan - First formed in 1860's, the KKK gained new popularity in the early 1920's. They opposed blacks, jews and catholics. They used violence and intimidation. by 1925 the group had grown to around 4 million members.
Some laws were racist - 'Jim Crow Laws' was a collective name for laws that discriminated against African Americans. Some laws made it difficult for them to vote and some laws forced whites and blacks to use seperate facilities like schools and transport. This was called segregation
Prohibition and organised crime
Prohibition was the banning of alcohol in America in 1920. People blamed alcohol for violence, immoral behaviour and the breakdown of families. Also many businesses blamed alcohol for the unreliability of workers.
Saloons were closed down. Buying illegal alcohol was expensive which caused consumption to decrease especially amongst the poor.
Organised crime 'took over' the distribution of alcohol -
Hijackers - stole smuggled alcohol
Bootleggers - sold on redistilled industrial alcohol
Moonshiners - made their own alcohol
Rum-runners - smuggled alcohol from different areas
In Chicago, gang warfare led to almost 1300 murders. Al Capone was a gang leader:
Al Capone was making 60 mil a year from alochol and 40 mil from gambling.
He used a private army to intimidate voters and other gangs, He was responsible for the murder of 7 gang members and sentenced 11 years in prison. He later died in 1947.
Prohibition ended in 1933 as too many problems were caused because of it.
Many people had more money to spend on leisure.
Films became the essential mass entertaiment and a multi-millio dollar industry. Massive theatre were created and films were silent up to 1927. Radio also boomed, there was only one channel in 1921 but another was created 2 years later. By 1929, 850 mil was spent on sets and parts every year also it made millions from advertising.
There were changes in manners and morals - Young people enjoyed smoking, dancing and parties. Some women started to wear lipstick, shorter skirts and high heels (these women were called flappers). Church attendance fell and divorce rate increased.
Women gained more freedom and independance - Films and songs encouraged new freedom. More womenn took on jobs and received their own salaries. Household gadgets gave some relief from domestic drudgery. Women were becoming more educated.
Traditional views still continued though - Books and magazines tried to set 'decent' standards. Women were still expected to run the house chores. People still saw men as superior to wome.