A Growing Economy

What is an economic boom? A rapid growth in a countrys moneymaking that leads to increased prosperity. The economic boom in America was based around consumer goods – luxury items that people wanted to buy but didnt really need.

On what factors was the economic boom based? 1. First World War 2. USAs wealth 3. New industries 4. Rising wages and stable prices 5. Government policies 6. Hire purchase 7. Weak Unions

First World War USA entered late and had no damages to repair Made $$$ by selling weapons and arms to the European Allies. While Europe fought, the USA took over many of their colonial markets. US chemical industry replaced the German industry as world leader During the war, became the banker to the rest of the world

The USAs wealth Rich in raw materials and had much fertile land. Worlds leading industrial nation. Population hard working and ambitious. The early 1900s movement from rural and agricultural to urban and industrial.

New Industries The total production of American industry increased by 50% during the 1920s. Boom fuelled by a demand for new consumer goods. – E.g. washing machines, refrigerators, radios and vacuum cleaners. Most significant was the growth in the MOTOR INDUSTRY.

Rising wages and stable prices Incomes rose 25% ; prices remained the same or fell. Assembly Line and Mass Production – make goods more cheaply Ford were producing a car every 10 seconds this pushed down prices and made goods more accessible for ordinary people Also meant workers could be paid less – unskilled work, repetitive tasks.

CONSUMER GOODS: PROSPERITY IN THE USA IN THE 1920S In just ten years there was a huge increase in production. It was a boom in CONSUMER GOODS, that is goods, which people bought and used themselves. GOODS FIGURES OF SALES IN 1919* FIGURES OF SALES IN 1929* % INCREASE OF SALES CARS9 million26 million 289% TELEPHONES 10 million 20 million 100% RADIOS60,00010 million 1667%

Government Policies Laissezfaire was economic policy favored by government. Give Big Business what it wanted. Businessmen believed low taxes gave people more money to spend. Government also introduced tarriffs on foreign goods coming into America to protect Americas industry.

'The business of America is business. 'The man who builds a factory, builds a temple. The man who works there, worships there.' President Coolidge We in America today are nearer to the financial triumph over poverty than ever before in the history of our land. The poor man is vanishing from us. Under the Republican system, our industrial output has increased as never before, and our wages have grown steadily in buying power. President Hoover, speaking in 1928 During his election campaign, Republicans promised 'a chicken in every pot and a car in every backyard'.

Credit The consumer boom was encouraged by the easy availability of credit. Consumers could buy the goods with a small deposit, and then pay the rest off in weekly or monthly installments. 6 out of 10 cars were bought this way.

Weak Unions The Republican government and business against trade unions. Employers allowed to use violence to break strikes and to fire union members Unions were excluded altogether from auto industry. Employers were able to keep wages low and working hours long, at a time when profits were increasing

Result: Confidence This confidence led them to spend more, which in turn made the economy grow even faster. Americans confident enough to start borrowing money to buy goods. Credit: Buy now, pay later. Wall Street boomed (a 'bull' market) with many people buying shares to make a profit. Many new businesses were 'floated' on the stock market.

New Society Consumers Entertainment industry – Hollywood, Charlie Chaplin, the talkies and cinemas, jazz clubs and speakeasies. Skyscrapers, highways and urban development.

Advertisement Advertisers used persuasion, ploy, seduction and sex appeal to lure buyers. How do advertisements like these signal a shift in the culture of the United States? Have advertisers pushed the boundaries further today?

The Automobile Freedoms, luxuries and privacy. Automobile Industry provided over 6 million new jobs! By 1929, 26 million motor vehicles were registered in the U.S. (1 car per 4.9 Americans)

Poverty and Depression Not every one shared in the prosperity, however, and there were glaring weaknesses in the American economy in the 1920s. However, there is plenty of evidence that all was not well with the American economy in the 1920s, and in 1928 the 'boom' began to slow down.

Farmers Agriculture suffering. Farm Incomes dropped drastically for several reasons World War I meant that Europe couldnt afford American food exports Farmers Canadian wheat producers were growing more grain Over-production made prices fall. Dustbowl – over farming led to some areas in the mid west to become unusable desert. As a result, millions left for the cities.

Labor The booming American economy in the 1920s led President Hoover to say: we in America today are nearer to the final triumph over poverty than ever before in the history of any land But there was still great inequality. – 32% of the wealth went to the richest 5% of people. -- Only 10% of wealth went to the poorest 42% -- Therefore, close to half of all Americans were too poor to take part in this consumer good based boom.

Labor: Mass Production = Deskilling Deskilling: term used by labor supporters to describe mass production techniques; Jobs become more repetitive and boring while alienating workers. Wages dropped.