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Why economic boom took place - Coggle Diagram
Why economic boom took place
Mass production
New methods of production to produce more goods at lower labour costs
Creation of large industrial corporation allowed companies to benefit from economies of scale
Mass production was combined with scientific management
Ford Model T was produced frequently, 1925 Model T cost $290
Samuel Insull controlled 111 companies which were linked by 1929 which were worth $3bn
In 1920 there were 8 million cars in the USA, by 1929 it increased to 26 million
Electrification stimulated development of radios, vacuums and toaster
Specialisation in Ford industry
In 1912 there 2.4m electrical appliance by 1929 there were 160m
Advancements in development in mass production (Henry Ford)
Technological advances
By mid 1930s, 75% of all US households possessed a radio
Cinema provided a mass outlet for advertising
By 1929 there were 619 commercial radio stations
By 1929 every town possessed a picture theatre showing Hollywood films
1st major commercial radio station was KDKA in Nov 1920
New roads meant new opportunities for advertising through billboards
Technological advances in cinema and radio
Car ownership boom impacted US society as it allowed workers to live further away from their place of work
Development of advertising and marketing in industries boosted consumption
Seaside resorts in Atlantic City, New Jersey grew as a destinations for New Yorkers
1921 Federal Highways Act meant new roads could be built -between 1920 and 1929 over 300,000 miles of road were built which was a boost to the construction industry
National parks were more accessible - people could drive to them
Automobile
Technological advances in engineering and electrical industries were stimulated by increased demand for efficient cars
Increase in car ownerships led to increased demand for petrol - stimulating the oil industry
As demand increased for cars, demand increased for materials
Emergence of petrol stations, motels and garages
Stimulated the growth of other industries - steel, rubber and glass
1929 car industry employed 7% of USA working force paying 9% of manufacturing wages
Car industry employed 375,000 workers, Ford's River Rouge employed 75,000 workers
100,00's of people were employed from this
1920 Ford produced 1.25m cars - 1 every 60 seconds
Car registration increased from 8 million in 1920 to 28 million in 1929
Hire purchase
Spending was stimulated by speculation - belief that USA would avoid a depression after previous downturns in 1857
1920 consumer borrowing was $2bn, by 1929 it was $8bn
75% of cares were bought using hire-purchase schemes
Hire purchase allowed consumers to pay small proportion of the price and pay off using rest in installments
Real wages rose by 13% between 1923 and 1929 - contributed to the boom and provided demand
1920s was a decade of low inflation and unemployment
Government laissez-faire policy
During his 8 years as treasury, Mellon handed out $3.5bn in tax reductions
Government operated in a budget surplus of $677m in 1925
Andrew Mellon adopted low taxes - rich band was lowered from 50% to 20%
Federal Trade Commission and Republican state governments reduced regulations which led to price fixing to raise profits - ignored by the FTC
Increased profits of the American chemical, dye, steel and aluminium industries
Employers were involved in the 'American plan' to reduce union power - no strike agreements and no-union agreements
1922 Fordney-McCumber tariff placed taxes on imports
By 1929 union membership fell by 1m
Laissez-faire policies were lowering taxes and deregulation
Between 1921 and 1925 the Supreme Court made 4 significant anti-union decisions which restricted union power
Coolidge was president from 1923-29
Farmers and black Americans - limits to boom
Farmers
Grain demand fell due to the national prohibition as well as wheat and barley - important to make whiskey and beer
Attempts to aid farmers through the McNary-Haugen bill failed due to laissez-faire
South-eastern USA was affected by the boll weevil which used damage to cotton plants
This would've stabilised agricultural prices (buffer stock)
By 1929 Americans lived in urban areas then rural
Agriculture was affected by technological advances like the combine harvester which increased productivity and unemployment
Once WWI finished, demand for US food exports dropped
Black Americans
In urban areas, they received low wages and had low-quality housing
The jobs they did have were labourers, clerks and servants
If harvest was poor - sharecroppers suffered hardship
1m left the south-east in the 1920s to find jobs
Many were sharecroppers who couldn't escape poverty
They went to cities like Detroit, New York and Chicago
Majority suffered legal and social discrimination
By 1929, black Americans were engaged in manufacturing employment in large numbers