Key Topic 1: The US Economy 1919-1929

Government Laws that are decided over the USA are sharded between federal and state governments, some laws are both's responsibilies. 

• The legislitive branch that passes the laws is called congress 
• The executive branch, headed by the president is run by the government 
• The supreme court has the power to overturn anything tht is a constitution or the law. 

CONGRESS (Passes Laws, Agrees Taxes, Agrees Presidential appointment between Judges and Ministers) > PRESIDENT (Proposes laws, runs foreign policies and appoints gvrnt ministers , commands armed foreces) > SUPREME COURT (Interprets cnstitution and laws, final appeal court)>

The First World War ended in 1918 See HD1

Europe

• Economies were in ruins 
• Had borrowed huge amounts of money from USA
• Trade, Communication and factory links where broken 
• Brittan owed $4,277 million; France owed $3,405 million to the USA

The USA 

• Had no war damage
• Factories and farms where producing at full capacity
• Exporting food and Manufactured goods to Europe
• Cotton to Japan
• High productivity and full employment with good wages for workers. 

Industry

• Mass production had started to be introduced, making factories more effiecient and producing good both cheaper and quicker, for the home market and exports

Agriculture

• The USA produced food to send to europe and the farmers increased there work and their farm land space.
• (For the World) Early 20's = US produced 20% wheat, 75% corn, 55% cotton, 70% petrol

"World's banker and suppiler of necessities"-The USA

Adjustment

• Laissez Faire- policy of not interferring in the way people run there business and not providing welfare to those who need it. 

Isolationism

The policy of not becoming involved in the affairs of other countries

American people (majority of) and the USA senete did not want to join the League of Nations (Set up by american president Woodrow Wilson (1913-1931) in earge to end WWI)

• May 1921-Emergencey Tarrif Act (increased import taxes on wheat, sugar ,wool & meat)
• June 1921-Budget and Accounting Act (controlls of government spending)
• November 1921-Revenue Act (changed taxes, charging busineses more, cutting wartime tax on profit)
• Sept 1922- Fordney & McCumber Tarriff Act (Raised and Extened tarrifs on Manufactured goods. Gave president power to controll tarrifs annually)

These tarriffs did not help US exports and other countries retaliliated by introducing their own tarriffs. 

Immigration

"Coming to a country to live there" - Glossary 

The 1921 Emergency Quota Act restricted immigration to 3% of the number of immigrants in the USA in 1910 (census) the 1924 Immigration Act reduced this to 2% and set a limit of 150,000 people a year. 

• "Keep America American" from an 'Open Door'

Mass Production- One of the most import factors that caused the boom, meaning that good could be produced quicker and cheaper

Henry Ford

• Ford was the pioneer of Mass Production and applied it in 3 stages;
• 1. Standardisation-Making things the same
• 2. Division of Labour- splitting a job up in to several stages, with a different person working on each stage
• 3. Assembly Line (Into. 1914)- a system where workers working on the same product wait in a place in the factory to do their part of the job while the thing they are putting together moves from person to person on rails or a conveyor belt.

Cars; Fridges; Radios 

Effects of Mass Production

 See HD2

Prosperity=Wealth : 1920's=Jazz Age 

The Boom Cycle

More Workers Employed 

More Wages Spent 

More Goods Bought

More Goods Made

 Reasons To Buy - See HD3 

Hire Purchase - buying something by paying a small part of the price at first the paying off the rest of the price in regular payments, so hiring what out have bought until you have paid for it fully. 

Shares

Shares- Where people buy a share in a company by giving them money, the number of shares they then have depends on the amount of money they give. The Shareholders then get a dividend from the company profits. 

Dividends- The share if the profit of a company that is paid to it's shareholders, usually yearly/annually. 

The Stock Market

• The stock market is where stocks and shares are bought and sold.
• 1920's = new companies made such big profits , the prices of their shares went up and up, more people bought and sold shares to make a profit, not just for dividends. 

$millions spent on share trading

• 1926 = $450.8
• 1929 = $890,000

Buying on the Margin see HD4

Who Didn't Benefit?

• Farmers; Old Industries; Black people; Poor immigrants; Low Paid Workers Unemployed. 

Older Industries

• Coal mining; Shipbuilding; Railways (During the war the production of these were in full production during WWI BUT electricity took over.)

Farmers (ad pay in 1919 was $13.5 /week but in 1930= $7.5/week)

• No more need to supply Europe with crops
• In 1920 prohibition was introduced & reduced demand for grapes and barley
• Clothes were made from new synthetic fabrics = demand for cotton and wool fell. 

Black people, Low-Paid workers & Poor Immigrants

incl. Labourers (mainly black people), workers in the worst paid industries. 

Describe the effects of Mass Production (6 Marks)

Why did the USA follow a policy of isolation?

What is hire purchase?

What is 'Prohibition'?