GCSE Modern History/The Boom
In the 1920s there was an economic boom in the USA.
Throughout the boom there was a great economic development in the USA. Some things that happened were:
- Sales of consumer goods (radios, telephones, fridges, etc.) increased greatly. For example, for every fridge in 1921 there were 167 in 1929. Overall, the output of the American industry doubled.
- Cars started becoming more widespread, and lots more roads were built.
- Lots of buildings and skyscrapers were built. The car made it possible for people to live in the outskirts of cities, so the suburbs expanded.
- Electricity was being provided to more and more homes. In 1918 very few homes had electricity. By the end of the 1920s, almost every urban home had it.
Reasons for the Boom
There are a number of reason why there was a boom in the 1920s. Some of these are:
- Industrial strength: The USA was a large country with lots of resources, so it didn't need to import much. There were also lots of customers in the USA that goods could be sold to.
- The First World War: Although the USA stayed out of direct fighting for much of the First World War, it was lending money and selling arms to the Allies throughout much of the war. It also took over much of Europe's international trade while they were fighting. As well as this, since it wasn't in the war for long, its resources were not drained the way Europe's were, so it emerged very powerful from the war.
- Republican policies: Throughout the 1920s, all American presidents were Republicans. Their policies contributed to the economic Boom. Some of these were:
- Laissez-faire: The Republicans believed that the government should not interfere with the economy.
- Tariffs: The Republicans set import tariffs which made it expensive to import foreign goods and protected American companies from foreign competition, allowing them to grow more rapidly.
- Low taxation: The Republicans kept taxation low as they believed that if people kept their money they would spend it on American goods.
- Trusts: The Republicans allowed trusts, huge super-corporations, to develop and dominate the industry. They believed that the trusts knew better than the USA what was good for the American economy.
- New industries and methods: Many new industries were being developed, such as the automobile industry. Mass production, and nationwide advertising, were also being used for the first time. All of this contributed to the boom.
- End of thrift: Before the 1920s, Americans believed in thrift, saving money 'for a rainy day.' But in the 1920s, this attitude changed - Americans now believed in spending their money to buy goods. This greatly benefited the economy.
Did all American's benefit from the Boom?
Not everyone was enjoying the Boom. This section looks at a few groups who were not.
The farming industry
In the 1920s the farming industry was going very badly. Between 1919 and 1928, farm income in the US almost halved, going from $22b to $13b.
Why were there problems in the farming industry?
There were a number of reasons for the problems in the farming industry. Some of these were:
- There was high competition from the efficient Canadian wheat producers
- The population of the USA was falling.
- There was high overproduction. Before the 1920s more and more land was being farmed, and there were more fertilisers and machinery being used. When the farming industry was no longer going well in the 1920s, this meant that there was lots of surplus.