04. b. Key features 1920s prosperity

Question 1

How did the USA emerge from WW1?

Answer 1

No fighting happened on US soil meaning there was no structural damage to repair
The USA had helped the old empire powers like Britain, lending them money during WW1
The US spent $22 bn on WW1 compared to over $35 bn spent by Britain and its Empire.

Question 2

What were unemployment figures like in the USA at this time?

Answer 2

Unemployment never rose above 3.7%

Question 3

What happened to the wages of industrial workers?

Answer 3

Employees were paid more. The real wages of industrial workers rose by 14% from 1914 - 1929.
On average their wages were two or three times higher than in Europe.

Question 4

What happened to the production of industrial goods?

Answer 4

Production of industrial goods rose by 50% between 1922 and 1929

Question 5

What was the assembly line?

Answer 5

A method of production using a moving conveyor belt. A product is gradually built as it moves along the line. Each person working on the assembly line completes one step of the production.

Question 6

Compare the number of automobiles on the road in 1920 to 1929.

Answer 6

In 1920 there were 7.5 million
In 1929 there were 27 million, approx. 1 for every 5 people

Question 7

How did more efficient working methods affect working hours?

Answer 7

Workers worked on average 44 hours per week by 1929 rather than 47 in 1920

Question 8

By 1924, how effective had Ford’s assembly line been?

Answer 8

10 million Model Ts had been built at Highland Park

Question 9

How did the automobile industry help other industries to grow?

Answer 9

Other factories copied the assembly line method, such as consumer goods like vacuum cleaners
Industries hugely benefited cars used 90% of America’s petrol, 80% of the country’s rubber and 75% of its glass

Question 10

How did the number of sales of electrical goods increase?

Answer 10

Between 1912 and 1929, the number of electrical goods sold per year went from 2.4 million to 160 million.

Question 11

What impact did technological advances have on leisure?

Answer 11

Automobile ownership meant people could go on holiday - by 1923 there were 2,000 new campsites across America and over 1 million Americans used them
Between 1923 and 1930, 60% of American families purchased radios - 50 million tuned in to listen to a boxing match between Tunney and Dempsey in 1927
During the 1920s, up to 10 million people would go to the cinema every day!

Question 12

How did advertising change during the 1920s?

Answer 12

Some companies employed psychologists to help them reach a target market e.g. Lucky strike targeted young women
Campaigns began to include slogans, brand names, celebrity endorsements and consumer aspirations
Consumers began to believe that they could not survive without a product
By 1929 $3 billion a year on advertising, 5 times more than in 1914

Question 13

How did credit work?

Answer 13

Consumers would pay a deposit, and then the rest in regular installments (hire purchase)

Question 14

Why was this so unstable?

Answer 14

Many people purchased multiple consumer goods on hire purchase, often spending between ¼ and ½ their monthly wages on them, such as cars.
Banks lent money very easily with few financial checks.
Many consumers and businesses ended up with debts that they could not afford to pay back

Question 15

By 1929 how much had been bought on credit?

Answer 15

By 1929, almost $7 billion worth of goods were sold using credit including 75% of cars and 50% of major household appliances.

Question 16

Who were the Republican Presidents of the 1920s?

Answer 16

Harding 1921-23
Coolidge 1923-29
Herbert Hoover 1929-33

Question 17

What approaches did the government take?

Answer 17

Laissez-faire meant very little government involvement in policy. The free market was allowed to operate with minimal restrictions.

The belief in self help and individualism meant that people should create wealth for themselves, and that in a successful economy wealth would naturally trickle down.

Isolationism meant that the government tried to protect American industry, and did not want to get involved in issues abroad

Question 18

What did the Fordney-McCumber Act 1922 do?
What did this mean for the market?

Answer 18

It raised tariffs (tax) on imported goods meaning foreign goods were much more expensive to buy than domestic (American) goods. This meant American industry sold more of their goods.
Tariffs were on average 38.5% on dutiable products.
It had a negative effect on farmers who relied on foreign markets to export their surplus goods, and purchased their machinery from abroad.
5 years after the tariff was introduced, European countries began to retaliate

Question 19

What were Andrew Mellon’s tax cuts?

Answer 19

Mellon implemented tax cuts to the rich in 1924, 1926, 1928, that mainly benefitted the wealthy.
1925 - Coollidge’s gov operated on a surplus despite tax cuts, at $677 million.
Also handed out reductions totalling $3.5 bn to large industry and corporations - the rich got richer.

Question 20

How did the federal tax cuts impact the population?

Answer 20

They benefited the wealthy, who paid less tax.
They did not impact the poor who were too poor to pay taxes anyway.

Question 21

What did the reduction in regulations mean for business activity?

Answer 21

Companies would fix prices to prevent fair competition
Workers could be easily exploited.
In the Southern textile mills, child labour was common, as was a 56 hour working weeks. Wages rarely rose above 18cents an hour.

Question 22

How could huge corporations dominate industry?

Answer 22

JP Morgan was the first $billion corporation. It controlled 67% of steel production in USA.
Cartels formed (When a group of different producers work together to fix prices or limit supplies so that they make the most profit. It is illegal!)
Holding companies were created (When a company is so big that it ends up controlling other companies, giving it the power to fix prices and make big profits)
Small businesses struggled to compete

Question 23

What did the government encourage businesses to do with sourcing raw materials?

Answer 23

To develop extensive interests abroad. For example, buying oiling concessions in countries such as Canada, Venezuela and Iraq. That meant that US businesses were allowed to explore for oil and then use it.