Economic Boom

The Economic Boom

​The American Economy 1914-1918

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World War I was the first modern mechanized war, requiring vast amounts of resources to equip and provision massive armies and provide them with the tools of combat.

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During the first 2 ½ years of combat, the U.S. was a neutral party and the economic boom came primarily from exports. The total value of U.S. exports grew from $2.4 billion in 1913 to $6.2 billion in 1917.

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Most of that went to major Allied powers like Great Britain, France, and Russia, which scrambled to secure American cotton, wheat, brass, rubber, automobiles, machinery and thousands of other raw and finished goods.

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Multiple Choice

What event in 1914 prompted the American economy to be successful, causing jobs to be created?

• World War 1

• World War 2

Multiple Select

America made money from World War One because they sold...

• cotton

• wheat

• rubber

• gold

• machinery

​Why did the American economy recover?

​America had several ​long term factors that helped to create an economic boom.

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​Natural resources - America had a lot of coal, iron, wood and oil.

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​Cheap labour force - immigrants provided cheap, unskilled labour. Immigrants from Poland, Russia, Italy, ireland, China and Japan were willing to work for low wages.

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​Word War One -

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1) America replaced Germany and the UK as the leader in certain industries. For example, America became the leading producer of fertiliser and chemicals.

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​2) American agriculture and industry were boosted by the UK, Russia and France buying food and weapons during WW1.

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​3) American bankers loaned huge sums of money to European countries that were repaid in the 1920s.

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​4) The war caused mechanisation to improve in factories, and new plastics were invented that were used after the war.

​ Mass production – as well as electricity, America also developed new technologies such as the conveyor belt

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The car industry played a very important role in the boom of the 1920s leading to technological change as well as stimulating growth of other industries (multiplier effect).

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This led to mass production in factories which: sped up production; allowed goods to be cheaper; more people buying goods as they could afford them.

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The introduction of standardised clothing sizes during WWI allowed clothes to be mass produced.

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Video in OneDrive or YouTube - Henry Ford's assembly line turns 100

Open Ended

Why did the fact that America had a lot of immigrants help the economy?

Multiple Select

World War One helped the American economy by:

• US manufacturers took over European overseas markets, e.g America became the world's leading producer of fertilisers and chemicals

• The war increased the use of mechanisation and developed the use of new plastics

• Many countries borrowed huge sums of money from American bankers and repaid them in the 1920s

• European countries bought food, raw materials and weapons from America

Open Ended

Why did the electrification of America help the economy recover?

This boom created a cycle of prosperity that encouraged lots of American industries to make money. For example, the car industry grew during the 1920s. The owners of the car factories got richer, but so did the owners of glass and rubber factories.

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These industries had to make more products to keep up with demand, which meant they had to employ more workers, who were paid a good wage. They then spent that money on new goods!

Open Ended

Describe how an increased demand for consumer goods led to the American economy improved.

Multiple Choice

What does laissez-faire mean?

• The government is very involved with how businesses operate and pass laws to control them.

• The government is lazy but fair.

• The government sets low business taxes and does not pass many laws regulating businesses.

• The government makes lots of laws about businesses but keeps taxes low.

Multiple Choice

Rugged individualism means

• people should have a lot of help from the government in order to succeed

• people need to be tough and strong to do well in America

• people should work hard and not rely on the government for help

Multiple Choice

Protectionism meant that

• America put high taxes on imported goods in order to protect and promote American businesses

• America put high taxes on American goods in order to promote and protect foreign imports

• America put high taxes on all goods in order to make money for the governm

Open Ended

Why would business owners in America like Calvin Coolidge's slogan "the business of America is business"?

Open Ended

Why would the slogan of Herbert Hoover, "a chicken in every pot and a car in every garage" be popular with the American people?

Fill in the Blanks

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​How did people afford these new products?

Their wages increased; between 1923 and 1929 the average wage rose by 8%. This allowed workers to buy the new consumer goods.

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This led to the growth of these industries and the American economy.

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​Credit – or hire purchase, made it easy for people to buy goods, even when they did not have enough money to pay for them immediately. Instead, people paid for goods in instalments. About half of the goods sold in the 1920s were paid for by hire purchase.

​Videos in the One Drive

​• Consumerism – wages increased; between 1923 and 1929 the average wage rose by 8%. This allowed workers to buy the new consumer goods. This led to the growth of these industries and the American economy.

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​ • Advertising – the advertising industry grew rapidly as firms realised the potential of adverts as a way of increasing their sales and profits. Magazines and newspapers were the most popular method, but firms increasingly used the radio and cinemas to advertise their products. Coloured adverts developed, along with catchphrases. The designers of the adverts studied psychology, as they wanted to ensure that the adverts would encourage people to buy the products. Women were used in adverts more than men.

​How did developments in consumer society contribute to the economic boom?

Open Ended

Why is this a good example of how advertising changed in the 1920s?

​• Department Stores – as more people bought consumer goods, this led to the growth of department stores, which sold a number of different goods, but especially electrical appliances. The USA was the first country to have a supermarket. J C Penney opened a chain of supermarkets called the Piggly Wiggly, with the first one opening in Memphis in 1916.

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• Stock market – ordinary people started to buy and sell stocks and shares in companies. Since the value of most companies’ shares seemed to rise in value, more people were prepared to risk their money by buying them. People would buy some shares, wait for a few months until the value had increased, and then sell them for a profit. Some people even took out loans to allow them to buy shares.

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•Republican presidents - The presidents of the 1920s were all Republicans, Warren Harding, Calvin Coolidge and Herbert Hoover. They all followed similar policies.

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• Credit – or hire purchase, made it easy for people to buy goods, even when they did not have enough money to pay for them immediately. Instead, people paid for goods in instalments. About half of the goods sold in the 1920s were paid for by hire purchase.

​Source A - the growth in sales of consumer goods 1919-1929

​Use Source A and your own knowledge to describe the growth of consumerism. (6 marks)

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• The second half of the question is what you need to write about i.e., the growth of consumerism.​

• The source is worth 2 marks.​

• Your own knowledge is worth 4 marks.​

• Do not copy or paraphrase the source. Instead, comment on what the source infers. Try and describe the content in your own words, but make sure you stick to the question.​

• Your own knowledge must provide information that is not in the source. It must also refer to the question.

​The source shows us that 9 million cars were sold in 1919 and 26 million cars were sold in 1929. It also shows us that 60,000 radios were sold in 1920 and 10 million were sold in 1929. In 1915 there were 10 million phones and in 1930 there were 20 million.

​You can get two marks for commenting on the source. How many marks is this response worth?

Multiple Choice

How many marks is the response worth?

• 0 marks

• 1 mark

• 2 marks

​You can get two marks for commenting on the source. How many marks is this response worth?

​The source shows that there was a clear growth in consumerism in the 1920s. The largest growth was in radios, with almost 10 million sold in nine years. 

Multiple Choice

How many marks is this response worth?

• 0 marks

• 1 mark

• 2 marks

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Your own knowledge must provide information that is not in the source. It must also refer to the question.

Look back at your notes - why did consumerism grow in the 1920s?

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​You need to give two examples to get the remaining 4 marks.

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I also know that advertising helped the growth of consumerism. Magazines and newspapers were the main methods of sharing adverts, but radio, cinema and colour posters were increasingly used throughout the decade.​

Department stores, such as the Piggly Wiggly, also helped the growth of consumerism. They sold many different items, particularly electrical goods such as hoovers. As they were in the same shop, it made it easier for people to purchase.​

​Look at the mark scheme. How many marks out of four would you give this response?

Multiple Choice

How many marks would you give the response?

• 0

• 1

• 2

• 3

• 4

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​In America lots of people bought consumer goods in the 1920s. This helped America boom. People could buy goods in department stores, which were new. A lot of houses had electricity so many people wanted to buy new electrical goods.​

​Look at the mark scheme. How many marks out of four would you give this response?

Multiple Choice

How many marks would you give this response?

• 0

• 1

• 2

• 3

• 4