A Growing Economy

1. A Growing Economy

2. What is an economic boom? • A rapid growth in a country’s moneymaking that leads to increased prosperity. • The economic boom in America was based around consumer goods – luxury items that people wanted to buy but didn’t really need.

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

4. 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’

5. The USA’s wealth • Rich in raw materials and had much fertile land. • World’s leading industrial nation. • Population hard working and ambitious. • The early 1900s ‐‐ movement from rural and agricultural to urban and industrial.

6. 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.

7. Rising wages and stable prices • Incomes rose 25% ; prices remained the same or fell. • Assembly Line and Mass Production – make goods more cheaply. • 1925 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.

8. 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.

9. Government Policies • Laissez‐faire 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 America’s industry.

10. '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'.

11. 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.

12. 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

13. 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.

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

15. 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?

17. 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)

18. 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.

19. Farmers • Agriculture suffering. Farm Incomes dropped drastically for several reasons •World War I meant that Europe couldn’t 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.

20. 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.

21. 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.