During the course of this essay I will discuss how America was advantaged by the collapse of the European economies after World War 1. How the policies of the Republican Government helped to surge the American economy. I will discuss how this economic boom did not benefit everyone in America and how the motor car industry helped stimulate America’s growing economy, and how luxury goods became more available in America, and I will continue with how hire purchase and credit was highly available during this time of prosperity.
I will outline who did and who did not benefit from this booming economy, also how reversals in U.S. policy occurred during 1919-1922. Then I will continue to explain the McCumber traffic act which issued a tariff on foreign goods entering America to encourage Americas to purchase American goods and thus helping the economy to grow further; leading to an increase in customer spending. I will tell you how Woodrow Wilson introduced the League of Nations, and how the USA isolated itself from the international community so as to avoid conflict. I will look at how America’s vast amounts of natural resources were a contributing factor to the growth of the economy.
Before the war, Germany had the largest chemical industry in the world but after the war it was significantly damaged and America took the place of the Germans in this industry, which greatly improved America’s economy. They also took over European trade. Europe was on its knees after the war so they borrowed money from the U.S. This provided the U.S. with a good regular source of revenue. The American economy was running away with itself. This was due to the explosion of the car industry.
Henry Ford was a car manufacturer. He came up with the idea of the first production line. This meant that different jobs were allocated to different people and in different stages, meaning production was more effective. The car industry used up to 80% of America’s steel 75% of the glass in the U.S. and 65% of leather and rubber. By the end of the 1920s, the motor car industry was the biggest industry in America. It also employed hundreds of thousands of workers directly. It kept many people in other industries employed.
Petrol was needed to run the car which brought about a new branch of businesses, which branched off from the car industries; petrol stations, the road building industry, motels, roadside diners, billboards and mechanic services were just some of these new businesses. Road construction was the biggest single employer in the 1920s. Owning a car was no longer a privilege reserved for the rich. The production line had mad making cars cheaper, so more people could afford them. There was one car to every five people in the USA, compared with one to 43 in Britain and one to 700 in Russia.
The car made it possible for more people to buy houses further from the cities. This boosted the house building industry as the American economy grew, more people spent money on luxury goods, this lead to such goods becoming more available in America and more companies making them. Telephones, radios, vacuum cleaners and washing machines were mass produced on a vast scale making them cheaper. New electrical companies such as Hoover became household names; they used the latest most efficient techniques proposed by the industrial efficiency movement. At the same time, the larger industries used sophisticated sales and marketing techniques to get people to purchase their products.
Mass nationwide advisements were used for the first time in the U.S. during the war to get Americans to support the war. Many of the people had learned their skills during the war and had now set up agencies to sell cars, cigarettes, clothing and other products. Poster advertisements, radio advertisements and travelling salesmen encouraged America to spend. Even if they did not have money people could now borrow it easily or they could take advantage of the new buy now pay later hire purchase schemes. By this time, the car industry was flourishing; the most famous car produced was the model T. More than 15 million where produced between 1908 and 1925. In 1927 they were produced at a rate of one every ten seconds.
In 1929, 4.8 million cars were made. The boom in the American economy was helped by the republican policies from 1920 to 1932. All the U.S. presidents were republicans and republicans also dominated congress. Republicans believed that government should interfere as little as possible in the everyday lives of the people. This attitude is called `laissez-faire`. They believed the job of the president was to leave the business to the businessmen. The republicans believed in import tariffs which made it expensive to import foreign goods. For example, in 1922, Haring introduced the Fordney-McCumber tariff which made imported food expensive in the USA. These tariffs protected businesses against foreign competition and allowed American companies to grow even more rapidly.
The USA also began closing its borders to foreign immigrants. Taxation was kept as low as possible this brought some benefits to ordinary working people. But it brought even more to the rich. The republicans’ thinking was, the more money people had, the more they would spend in America and the wealthy would re-invest in America. They also allowed the development of trusts. These were huge super-corporations which dominated industry. Woodrow Wilson and the democrats had fought against trusts, because they believed it was unhealthy for men such as Garnegie (steel) and Rockefeller (oil) to have almost complete control of one vital sector of industry.
The republicans allowed the trusts to do what they wanted, believing that the captains of industry knew better than politicians did. However, this time of prosperity in America was not felt by the whole population. Farming was at a low point. The total U.S. farming income dropped from $22 billion in 1919 to just $13 billion in 1928. There where a number of factors that contributed to these problems. After the war, Europe imported less food from the U.S. This was partly because, Europe was poor and partly due to the tariffs which stopped Europe from exporting to the U.S. farmers were also struggling against competition from the efficient Canadian wheat producers. The population of the U.S. was falling which meant there where fewer mouths to feed. At the route of all these difficulties was overproduction.
This resulted in wheat being produced which simply nobody wanted. In the 1920s the U.S. farmer was each year producing enough to feed his family and 14 others. Prices dropt dramatically as desperation kicked in and farmers tried to sell their produce. Most farm prices fell by 50 per cent. Hundreds of rural banks collapsed in the 1900s and there were five times as many farms going out of business as there had been in the 1900s and 1910s. Not all farmers were affected by these problems. Wealthy Americans wanted fresh vegetables throughout the year. For most farmers, the 1920s were a time of great difficulty .and this was a major concern. About half of all Americans lived in rural areas; the difficulty affected more than 60 million Americans. Lots of Americans lost their jobs, these where largely unskilled workers, mainly immigrants.