1920s: prosperity and poverty

• the booming economy - Between 1922 and 1929 the annual Gross National Product of the USA increased by 40%. The average income per head increased by 27%.
• the booming economy - CI SUCCESS (C)

  Consumer boom - growth of personal possessions (c.f. Woolworths, hire purchase, commercial travellers)
• the booming economy - CI SUCCESS (I)

  Innovation in production methods - especially in the motor industry (by 1925 Ford were producing a car every 10 seconds); this pushed down prices and made goods more accessible for ordinary people (the ‘Tin Lizzie’ cost $850 in 1910, only $295 in 1920).
• the booming economy - CI SUCCESS (S)

  Synthetics – the invention of bakelite (the first plastic), cellophane and nylon - and chemicals.
• the booming economy - CI SUCCESS (U)

  Upsurge in car ownership – esp. the Ford Model T; 15 million had been produced by 1927, and the number of Americans owning cars rose from 8 to 23 million.
• the booming economy - CI SUCCESS (C)

  Consumer durables/electrical goods– fridges, washing machines, dishwashers, vacuum cleaners, record players.
• the booming economy - CI SUCCESS (C)

  Communications revolution – number of telephone doubled/ number of radios increased from 60,000 to 10 million.
• the booming economy - CI SUCCESS (E)

  Entertainment industry – Hollywood, Charlie Chaplin, the ‘talkies’ and cinemas, jazz clubs and speakeasies.
• the booming economy - CI SUCCESS (S)

   Stock market – Wall Street boomed (a 'bull' market) with many people buying shares to make a profit.   Many new businesses were 'floated' on the stock market.
• the booming economy - CI SUCCESS (S)

  Skyscrapers, highways and urban development.
• the booming economy - what does CI SUCCESS stand for?

  consumer boom, innovation in production methods, synthetics, upsurge in car ownership, consumer durables/electrical goods, communications revolutions, entertainment industrys, stock market, skyscrapers (highways and urban development)
• poverty and depression - evidence that all was not well with the American economy in the 1920s, and in 1928 the 'boom' began to slow down. - FLOP CUTS what does it stand for -

  farming, low wage earners, old industrys, poor black americans, cartels (trusts & monopolies), unemployment, trade problems and stock exchange
• poverty and depression - FLOP CUTS (F)

  farming -

  • machinery and overproduction led to rapidly falling prices (wheat prices fell from $183. a bushel in 1920 to 38 cents ain 1929). 
  • In 1929 average income in of farmers was only 40% of the national average, and many farmers could not afford their mortgage
  • in 1924, 600,000 farmers went bankrupt.
  • Note also that rural areas did not have electricity, so most country-dwellers were excluded from the consumer boom.
• poverty and depression - FLOP CUTS (L)

  low wage earners -

  • e.g. unskilled and casual workers, or the 2 million who were unemployed - could not share in the prosperity. 
  • There were great inequalities of wealth; the top 5% of the population earned 33% of the income, while 60% of Americans earned less than $2000, and that 40% were below the poverty line (notably farmers/ Black Americans/ immigrants). 
  • Only 3% of semi-skilled works owned a car.   
• poverty and depression - FLOP CUTS (O)

  old industrys -

  • overproduction of coal (which was being replaced by oil and gas) led to mine closure and falling wages. 
  • In 1929 a coal miners wage was barely a third of the national average income. 
  • There were also problems in the textiles industry (where 'flapper' fashions were reducing the amount of cloth used to make clothes).
• poverty and depression - FLOP CUTS (P)

  poor black americans -

  • 1 million black farm workers lost jobs in the 1920s.
  • Northern black workers faced lowest-paid, menial jobs.
  • Harlem, New York: 250,000+ people in 50x8 block area, overcrowded and segregated.
  • Residents slept in shifts due to limited space.
  • 'Rent parties' on Saturdays common to raise money for Sunday rent payments.
• poverty and depression - FLOP CUTS (C)

  cartels, trusts & monopolies -

  • ‘fixed the market’ and tried to keep prices high and wages low.  
• poverty and depression - FLOP CUTS (U)

  unemployment -

  • new technology was throwing more and more people out of work; the number of unemployed stood at 2 million throughout 1920s. 
• poverty and depression - FLOP CUTS (T)

  trade problems -

  • high tariffs were causing other countries to retaliate, as well as reducing the purchasing power of those countries, which made it hard for American companies to export their products abroad.
  • Farmers, who relied on exporting wheat, were especially hard-hit by this.
• poverty and depression - FLOP CUTS (S)

  stock exchange -

  • the biggest problem; Wall Street was 'over-heating. stopped rising.
  • So great was over-confidence that people were even buying shares in imaginary companies. 
  • Many were buying shares ‘at the margin’ (a person could get a loan of up to 90% to buy shares) expecting to make enough profit to repay the loan when the shares were resold - brokers’ loans almost trebled 1926-9.
  • All this threatened disaster if share prices ever stopped rising
• why industry boomed - PAT GOT CASH what it stood for -

  population, abundant raw materials, tarrifs, government, opportunities of new technology, techniques of production, cycle of prosperity, advertising, sales methods, hire purchase
• why insudstry boomed - PAT GOT CASH (P)

  • Population growing rapidly increased demand for consumer goods.
• why indusrty boomed - PAT GOT CASH (A)

  • Abundant raw materials – esp. coal, iron and oil – allowed cheap production
• why indusrty boomed - PAT GOT CASH (T)

  Tariffs – protected American industry from competition
• why industry boomed - PAT GOT CASH (G)

  • government – the government relaxed regulations and reduced taxes (this is called ‘laissez faire’)
• why industry boomed - PAT GOT CASH (O)

  • Opportunities of New Technology (e.g. electrical goods, radio, film, nylon)
• why industry boomed - PAT GOT CASH (T)

  • Techniques of production– Ford’s Assembly line method, and Frederick Taylor’s time and motion
• why industry boomed - PAT GOT CASH (C)

  • Cycle of prosperity – increased prosperity
• why industry boomed - PAT GOT CASH(A)

  •  Advertising (e.g. billboards, radio commercials,)
• why industry boomed - PAT GOT CASH (S)

  • Sales methods (e.g. commercial travellers, mail order, chain stores such as Woolworths)
• why industry boomed - PAT GOT CASH (H)

  • Hire Purchase – instalments allowed people to buy now, pay later.