Explain Your Answer
After World War 1 the Americans who were run under a Republican Government decided to return to a policy of isolationism. The nine years that followed 1920 were often called the Roaring Twenties. It was a time when cheap cars, radios, refrigerators and many other advances in electrical equipment changed American lives, and when skyscrapers began to rule the skyline. The American public found themselves in an economic boom.
During the 1920’s America was governed by three Republican Presidents : Harding, Coolidge and Hoover. Coolidge was very much in favour of business and the stock market. He thought that Americans should concentrate on making themselves prosperous- by investing money, setting up companies and working hard. This was summed up when he was quoted as saying, ‘the business of America is business’. Hoover had views on business which were very similar to Coolidge’s views. He believed in ‘rugged individualism’, where people worked hard for themselves. The Republicans’ policy was one of the many reasons for the massive economic boom.
The greatest boom that took place in the 1920’s was in the car industry. The Industry had three rival manufacturers – Chrysler, General Motors and Ford. Henry Ford pioneered mass production using assembly lines and was therefore able to sell his cars a lot cheaper. A ‘Model T’ car that would have cost $1200 in 1909, when it would have been hand built, cost only $295 in 1928 through mass production. Ford also standardised this model(one engine and one colour) which dropped prices even more. By 1928 one in three families owned at least one car.
Although there was a drop in employees as mass production began, the car industry did in fact help the employment problem in America to make the USA more prosperous. The manufacturing of cars used up 20% of the Nation’s steel, 80% of her rubber, 75% of her plate glass and 65% of her leather industry. This great demand for these resources meant that a huge amount of jobs were created. Many other industries thrived off the car industry. The main example of this is the oil industry. The Oil producers of Texas were made rich as cars on the road used seven billion gallons of petrol a year. As the amount of cars on the road increased new roads had to be built which provided many jobs for the public. In this period thousands of garages, petrol stations, ‘motels’, restaurants all emerged along the vast amounts of new road. All of these public services provided employment.
Another reason for the massive boom in car sales was that even the poorer people could afford the new cars. This was because they were able to obtain a bank loan from one of the many new banks that started business in the 1920’s. All the people had to do was pay the bank back their money in very small amounts.
Daily life continued to change as new inventions such as the radio, refrigerator and the vacuum cleaner began to be common place in nearly every American home. Tariff barriers limited the entry of foreign goods to the USA. This meant that foreign products could not rival American goods as they made the price much higher. So obviously the public brought the cheapest, which were the American products. The goods were also easily affordable because of the massive increase in the average worker’s pay and because people could borrow money from the banks. This industry supplied many jobs to the public as the ever increasing amount of inventions were brought.
There was a massive increase in shopping outlets as the new inventions became more popular. For example ‘JC Penneys’ department stores increased from 312 to 1395 outlets in just nine years. This large increase also provided thousands of jobs.
Some people became rich in this era because of prohibition. This was a law that was passed in 1920 preventing the consumption of Alcohol. Secret bars began to open where alcohol would be consumed. The alcohol was smuggled into the country by ‘Bootleggers’. In 1925 1,003,000,000 gallons of alcohol were consumed. This made the bootleggers rich, the prime example being Al Capone who earned $60 million a year. He and many others also made money through their illegal gangs by charging shopkeepers for protection.
Amongst the younger generation a feel good factor had generated. This era was called the ‘Jazz Age’ and gave younger people more freedom. For example women began to flaunt their bodies in public and there was a revolution in sexual behaviour. This era also saw new dances and a different style of music ‘Jazz’. Because of this Jazz clubs, where the music was played, sprung up every where. These clubs provided jobs and even more money was profited.
During the 1920’s a vast amount of the Nation became prosperous and this is shown by the enormous rise of the country’s Gross National Product, from $74 billion to $104 billion in only eight years. This huge prosperity though, as you will soon realise, was not shared by every body.
Six million families-42% of the total- had an income of less than $1000 a year. With such a low average pay, nearly half of the nation could afford new cars and inventions.
Every year in the 1920’s nearly 25,000 workers were killed on the job and on average 100,000 were permanently disabled. One percent of the prosperous farmers received as much income as 42% of the families at the bottom. Also the poorer families were not helped by the government which had decided on a policy of ‘rugged individualism’ where the government did not interfere with peoples lives.
During the 1920’s many small farms that had made agriculture America’s largest industry before 1920, were being sold. This was because food prices fell to the advantage of the customer. The reason for this was because farmers were now using new machinery like the combine harvester and the tractor. Using these meant that you could produce more food at a quicker rate. This advancement proved to be a major problem as the farmers were producing more food than the nation could eat. Farmers were getting paid a lower income as surplus food caused prices to drop. T he food was also being sold at large supermarkets at the cheapest prices ever.
To try and get out of their difficulties, many farmers took out mortgages worth in total nearly $200 million. This only made problems worse, as farmers found that they could not keep up with the payments as their income kept falling. Subsequent to not paying your mortgage the bank would come and throw you off your property. Still the government did nothing to help the poorer farmers.
The black workers in the south began to quit their jobs at the cotton plantations. The racial prejudice in the south was very high and so the black wages were minimal. They were only able to get the lowest paid jobs because they had the poorest standards of education. Even though the black men did not become prosperous, they kept pursuing it.
Between 1920 and 1929, 824,000 black people moved to the north from the south. They were given jobs on car assembly lines in the big cities. The wages they were received were on average low but were much more than the amount they were paid in the south. In the cities there were some black men who resorted to crime for their income as not everybody could get a job.
Consumer goods such as the refrigerator, radio and irons were still being produced at a rapid rate. Customers though, did not need more than one of everything and of course needed no more. This meant that sales decreased rapidly and workers had to be laid off. Just like the farmers surplus stock, the goods that were not brought were just left lying in factories.
But why you ask, did America not sell any of their surplus food and goods to other countries? The answer to this, was that because other countries were also using tariff barriers as in the U.S.A. they had proven to be successful. This meant that it was nearly impossible to export goods or food and it all remained unused and almost worthless in the U.S.A.
Around one million people were investing in shares in 1928. You made money on the Stock Market by selling shares you bought for a higher price. The only problem with this was that it could only work if (a) share prices kept rising and (b) people wanted to buy shares. As surplus food and goods were being left and unused businesses lost money and had to lay off workers. The massive loss of business caused share prices to suddenly decrease. People began to frantically sell their shares as their value dropped. The two necessities for a successful Stock Market were no more. On the 24th October 1929, the fragile Stock Market collapsed and people panicked and sold all their shares until they were rendered worthless.This was known as the Wall Street Crash.
America and her people were no longer prosperous and faced a great depression.