Causes of the Boom Tarrifs
- Before WWI America believed in low tariffs- this encouraged world trade.
- After WWI America believed that high tariffs would protect American businesses.
- American wages were high, European wages were lower. American businesses feared that European firms would undercut them as they would be able to produce goods at a lower cost and therefore sell them at a lower cost.
- Fordney- McCumber tariff 1922- placed higher tariffs on goods coming from countries with low wage. American selling price- adjusted the tariff in such a way that the selling price of imported goods was always higher than the selling price of US goods
- Overproduction was causing a depression in farming, and American farmers wanted to keep foreign grain out to keep grain prices up. Harding passed Emergency Tariff (May 1921) to increase duties on food imports. Fordney- McCumber tariff 1922- placed higher tariffs on goods coming from countries with low wage. American selling price- adjusted the tariff in such a way that the selling price of imported goods was always higher than the selling price of US goods
- Supported American businesses by giving them the advantage, until other countries decided to do the same.
Causes of the Boom- Isolationism
- Many Americans saw WWI as a ‘European War’ and they did not want any more of their soldiers to be involved in future conflicts
- Woodrow Wilson wanted US to join League of Nations- but it was rejected by the Republicans who were lead by Cabot Lodge and America did not join
- The Republican Candidate for Presidency in 1920 was Harding, and he wanted ‘normalcy’ which meant a return to what it was like before the war
- Isolationism grew even stronger during the 1930s- and the USA created Acts which meant that they would not get in involved in European Wars.
- Isolationism lasted throughout the 20s and 30s
- Political policy of isolationism supported the immigration laws and the economic policy of tarrifs
- Isolationism was popular with American public
Causes of the Boom- Cycle of Prosperity
- Increased demand for consumer goods
- This lead to increased production (factories had to create more products because there was a market for them)
- This lead to increased employment because industries had to employ more people so that they could produce the amount of goods that people wanted (demand)
- This lead to more money available to spend on consumer goods because people were employed they had money to spend on goods
- This lead to increased demand for consumer goods
- The cycle continued and helped the American economy grow
- After the depression, it occured in reverse and was called 'the cycle of depression'
Causes of the Boom- Republican Policies
- Government encouraged the growth of businesses by a policy of non-interference, this is called ‘laissez-faire’ (do nothing)
- The governments did not place any controls on industry or financial institutions, this allowed them to grow.
- Government lowered taxes on people's incomes (so people had more money to spend)
- Government lowered taxes on companies profits (so companies could buy new factories and buildings)
- Placed tariffs on foreign goods- called protectionism, this encouraged Americans to buy American goods.
- Popular with American population and there were Republican Presidents throughout the 1920s
- Allowed businesses to grow
Causes of the Boom- Mass Production
- Mass production of goods allowed economics of scale. Therefore the cost per unit of producing goods came down. Time and Motion studies- looked for ways to make workers more efficient
- The motor industry was the first to use assembly line to produce goods in large quantities
- By placing workers on the assembly line and giving each worker one specific task, factories could produce goods much more quickly and much more cheaply.
- Henry Ford created this idea- he wanted to make a motor car for ‘the ordinary man and his family’
- Ford’s car was called the Model T. (Tin Lizzie) Produced in 1911- by 1920s a Model T was being produced every 10 seconds
- 1911 Model T- $850 1920 Model T- $295
- Telephones, vacuum cleaners, washing machines and ovens were also made using the mass-production methods.
- Produced more goods at a lower cost per unit
- The expanding of the car industry also helped other industries to grow- steel, rubber, glass, leather and oil
- Lead to overproduction
Causes of the Boom- Advertising
- Advertisement in, Magazines, Newspapers, Billboards, Radio, Cinemas
- Mail order- allowed people in rural areas (the countryside) to access goods
- Advertising was also aimed at women so they could ‘pester’ their husbands for the latest gadget for the kitchen
- People became competitive with their friends and neighbours and wanted to have the same or better products- this increased demand, so factories produced more
- Advertisements helped the growth of commerical radio stations
Hire Purchase and Stocks and Shares
- People could buy consumer goods more easily thanks to new credit facilities, especially hire purchase
- This allowed you to buy something and pay for it in installments
- This was normal at the time and encouraged
Stocks and Shares
- Thousands of 'ordinary people' bought stocks and shares in businesses
- The American stock exchange experienced a bull market (a rise in all prices)
- Between 1921 and 1929 share prices rose 500%
- This meant that people were making money on their stocks and shares as American businesses were growing.
People were relying on credit, and people bought shares 'on the margin' (paying for 10% of the share and getting a loan to cover the rest) this lead to huge amounts of debt and an unstable economy.
Causes of the Boom- Raw materials
- USA was rich in raw materials because it is a large country
- USA had plenty of steel, coal, leather and wood, this meant that USA did not have to import these from other countries
- All of these materials were used for making consumer goods, which allowed these indutries to grow
- supported 'isolationism' because America did not need to buy or import these raw materials from other countries.
The 1920s saw a huge increase in the the entertainment industry, mainly because people had money that they wanted to and were able to spend.
Music- people would listen to jazz and blues in clubs and bars, this was seen as being daring and different because was played by Black American musicians such as Louis Armstrong and Duke Ellington. Radio- number of homes with radios rose from 60,000 in 1920 to 10 million in 1929. These commerical radio stations made money from advertising, and encouraged people to buy new consumer goods. Phonograph- people used this to listen to new recordings at home.
Cinema- 1929 more than 110 million Americans were going to the movies each week. First movies were silent and in black and white. The Jazz Singer (1927) was the first 'talkie' (movie with a soundtrack). Hollywood became the film capital of the world- MGM and Paramount produced more than 500 films every year. Celebrities were created such as Charlie Chaplin and Gloria Swanson. Walt Disney's Donald Duck and Mickey Mouse became famous and popular.
Fads and Flappers
During the 1920s people wanted to rebel against the 'norm' especially young people.
Fads: Old fashioned dances like the Waltz were scrapped, people instead danced the Tango, Bunnyhug and Charleston that were seen as being more sexually suggestive. Dance Marathons took place. People would sit on top of flagpoles and crosswords became popular. Charles Lindenbergh 1927 became the first man to fly solo across the Atlantic. Sports heroes were born as more people went and watched sport, it was also heardon the radio- Jack Dempsey (Boxer) and Babe Ruth (Baseball)
- Flappers- ladies with black bobbed hair, smoked cigarettes, wore lipstick, short skirt and made themselves look flat chested and would drive a Tin Lizzy
- Some flappers were openly lesbian
- Divorce was made easier and the number of divorces doubled - women were able to start making decisions about their lives
- The number of working women increased by 25 per cent
- Anti- Flirt Association was created, distributed badges and gave speeches
Divided Society- Immigration
- More than 40 million people moved to the USA between 1859 and 1914.
- Isolationist views and WASPs wanted to stop immigration.
- Many were worried immigrants would steal their jobs and spread commmunist ideas from Eastern Europe
- 1917 Immigration Law- all immigrants had to prove they could read English
- 1921 Emergency Quota Act- limited number of immigrants to 357,000 per year. The number coming to the country could not exceed 3% of the number already living in the USA in 1910.
- Impact- this law kept out people from Eastern Europe as there was not many of them living in the USA.
- National Origins Act 1924- reduced the quota to 2% of 1890.
- Impact- this reduced the quota and moved the date back, as there were even less immigrants living in America 1890.
- 1929- number of immigrants was reduced to 150,00 and immigrants from Asia were blocked.
Divided Society- Immigration 2
Effect of isolationism was distrust and dislike of immigrants
‘Red Scare’- areas of cities became ghettos where immigrants would live. Housing was poor and there was violence and crime. Americans feared communism spreading from countries such as Russia and Eastern Europe, this became known as the ‘Red Scare’.
16th September 1920, a bomb went off on Wall Street. 38 died and 400 were injured. American newspapers blamed Italian immigrants- although they were never caught. 10,000 people who were suspected of being communists were arrested this was called the ‘Palmer Raids’, any of these that were immigrants were deported (sent back to their original country).
Sacco and Vanzetti
Two Italian anarchist immigrants were charged with the murder of two guards. 107 witnesses said they had seen the men somewhere else at the time of the crime. Because these witnesses were immigrants the police and jury did not believe them. Sacco and Vanzetti were executed in 1927.
Roaring 20s, Divided Society-KKK
Who were they?
- The Ku Klux Klan was a racist militant group established by people who believed that white people were better and wanted to see black people remaining slaves. It began in the southern states at the end of the American Civil War in 1865
- The Klan would only accept WASPs (White Anglo- Saxon Protestants) as true Americans and saw it as their mission to save White Americans.
- The Klan would only accept WASPs (White Anglo- Saxon Protestants) as true Americans
- They discriminated against Black Americans, Roman Catholics, Jews and Mexicans.
- Membership grew: 1920- 5000 members, 1925- 5 million members
- Klan blamed immigrants and Black Americans for the lack of jobs, because often these groups were willing to work for less money.
- Klan had rich and important figures including the police and politicians, this meant it was difficult to punish members
- Klan was strongest in the Southern States of America.
- Klan members: dressed in long white robes and hoods and held ceremonies, spoke to each other in secret conversations ‘Klonversations’, used torture, violence, lynched, destroyed property of people who were not a ‘true American’.
- After 1925 Klan membership fell as there horrific crimes began to be reported
Divided Society- Poor
The boom didn't effect everyone- 60% of Americans lived below the poverty line.
Farmers- Farmers struggled during the 1920s- almost half of all Americans were involved in farming. Tractors and combine harvesters helped farmers produce more food. However this caused too much food to be produced and prices dropped. Many farmers struggled to pay for their mortgage and were evicted from their house. Many tried to move to California to work on fruit farmers.
Black American Farm Workers- Black American farm workers lost their jobs in the 1920s- many had to move from their farms in the south to the cities in the north. The were paid low wages and struggled to find work.
Older Industries- Workers in old industries (like the coal industry) suffered because new forms of power such as oil and gas became more widely used, to fuel the boom. The coal was overmined which led to wage cuts, job losses and mines were shut down. Other industries such as cotton farming and textiles also suffered.
Divided Society- Prohibition
Why was prohibition introduced?
- Marriages- alcohol was seen to cause arguments between couples, increase domestic violence and fuel divorce
- Insanity- many Christians believed alcohol was the Devil's drink and caused insanity
- Neglect- people were worried that men were spending money on alcohol rather than providing for their family
- Industry- people believed that productivity would increase as people would work harder and not be hungover
- Crime- alcohol was seen to fuel violence
- Groups such as Women's Christian Temperance Union (founded in 1874) and Anti-Saloon League (1895) campaigned to have alcohol banned
- 1917- 18 Dry States (states that had already banned alcohol)
Important dates for prohibition
- 1919- 18th Amendment made prohibition part of the US constitution
- 1919- Volstead Act defined an alcoholic drink was any drink that was more than 0.5% alcohol
- 1933 Roosevelt repealed the 18th Amendment (this ended prohibition)
Divided Society- Prohibition (2)
What were the effects of prohibition?
- Moonshine/Bath tub gin: prohibition was unpopular so people produced their own- poor quality and could lead to death
- Speakeasies (secret bard): 1930 nearly quarter of a million. Set up in cellars and back rooms. Sold alcohol brought in by bootleggers- rum from West Indies
- Gangsters: profits were made from alcohol and this created gangsters. Gangsters ran Speakeasies and protection rackets (where gangs look out for each other). Famous gangsters like Al Capone became celebrities and mixed with business men and politicians. Al Capone had a gang of 700 men with machine guns that acted like a private army. Gang Violence: Gangland murders-when rival gangs fought to take over another territory, in Chicago 227 gangsters were murdered in four years, without anyone being convicted. St Valentines Massacre-14th February 1929, Al Capone machine gunned dead seven members of a rival gang run by ‘Bugs’ Moran.
Failures of prohibition. Prohibition Bureau set up by the government employed 4000 agents for the whole of the USA. Eliot Ness was a successful agent, but most did not do their job properly 1 in 10 were sacked for taking bribes. Most Americans did not agree with prohibition- so it lost support. Americans were prepared to break the law to have a drink
Problems with the American economy
- Overproduction- once people had bought their consumer goods, there was no longer a demand for them, this meant companies had to reduce their work force which lead to unemployment therefore people were unable to buy consumer goods.
- Unequal distribution of wealth- American economy was making money, but was not going to everyone. 60% of Americans lived below the poverty line
- Tarrif policy- Foreign governments had also put in place tarrifs- this meant it was difficult for American companies to sell their goods and grain abroad.
- Financial speculation- druing 1920s share prices in companies were going up and people would buy shares 'on the margin' (pay 10% in cash and borrow the rest). People just assumed they would be able to sell their shares for a profit and pay back their debt (this was called speculation) BUT in 1928 the increase in share prices slowed down and people begun to sell thier shares, prices fell and this was called the 'bear market'.
- BLACK THURSDAY-24th October 1929- 13 million shares were sold, prices went down
- Group of bankers started buying shares to stop the prices from falling (worked temporarily)
- Monday 28th October- people started panicking again and 9 million shares were sold at low price
- Wall Street Crash, Tuesday 29th October-16 million shares were sold and prices fell,$8 billion was lost in a day.
Effects of the Wall Street Crash
- Confidence in the American economy was destroyed
- No longer 'cycle of prosperity' but a 'cycle of depression'
- Banks suffered- many banks had invested their customers' money in shares, there was a 'run on the banks' (people rushed to take their money out of banks)
- 1929- 700 banks collapsed
- Due to the laissez-faire policies of the government, banks were not checked. Investors in the banks recalled money after the Wall Street Crash and many banks could not afford to pay them back, this cuased many banks to collapse.
- When the banks asked for people to repay their loans, people could not afford to, so people had to sell their houses and possessions.
- Companies lost money so had to reduce the number of workers, this lead to unemployment
- Problems on the Stock Market spread to banks and then to industries and this caused the Great Depression.