Prosperity? 

Reasons Why the USA
boomed in the 19205

You will also ncecl to consider wlurther
everybody benefited during...
Republican P olicie s

Coolidvc and his

‘ O D

  f Trcasur_' Sc(‘rctar_f, 
Andre w Mellon (one of
° th US . -‘s -‘ h st )...
Fordney-McCumber Act

Raised tariffs to cover the difference
between domestic (US A) and foreign

production cos ts

Meant...
Tax Reductions

Federal taxes significantly reduced in

1924,1926 and 1928.

In 1920 the highesttaxlevelwas 65% - in
1928 ...
Fewer Regulations

Federal Trade Commission — the trading

standards body was under—funded

Sharp business practice like p...
Foreign Policies

“ Disputes with Mexico over business land

solved by diplomacy not war

‘‘ Investmentin japan which was ...
New Business Methods

“ Growth ofhuge corporations — mostly

manufacturing like Ford,  Firestone etc

‘‘ By 1929 the large...
How large corporations dominate

industry

° Operate a cartelto fix prices — although
illegal,  government turned a blind ...
Technical Advance 5

Motor vehicle industry — by end of 1920s
23 million cars on the road in USA

Huge aspirational desire...
Management S cience

Blggfil‘ l)llSlI'l€SS :  I'l’lOI'€ COHlPl€X management

Entrepreneurs like Henry Ford who tried to con...
Ta yloris m

‘Time and Motion’ management
Dated from late nineteenth century
Initiative removed from the workforce

People...
Advertising and S alesmanship

New mass media — cinema and radio

By 1928 — 17,000 cinemas in the USA —

offering a cheap ...
Need to create a demand

“ People needed convincing that they could
not do without the latestmodel or design

‘“ Advertisi...
Easy Credit

By 1929 almost S7billion worth of goods

s old on credit

75% ofcars and 50% ofhousehold

apphances
This led ...
Influence in Foreign Economies

Raw materials sought in many countries

Oil concessions bought in Canada , 
Venezuela ,  I...
Foreign Relations

US business effectively controlled Canada

US businessmen encourage to develop
economic ties with the U...
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Factors Behind The 1920s Boom

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Factors Behind The 1920s Boom

  1. 1. Prosperity? Reasons Why the USA boomed in the 19205 You will also ncecl to consider wlurther everybody benefited during these years — which is the no xt le s s 0 n /1) re s e nta Lion
  2. 2. Republican P olicie s Coolidvc and his ‘ O D f Trcasur_' Sc(‘rctar_f, Andre w Mellon (one of ° th US . -‘s -‘ h st ) business ofthe f‘f““ b( In u (I In th( In x , Ma rkct. Am e 11C 21 n ‘Trickle —L)own' ‘Ruggc-(1 IrE<l‘i0t1hml'ts>ln' — Hoover's ideas about An1eri(‘.1n wa V of life people is business ’ — Coolifiia govemment did intervene quite C . s ez-Fa ire however the heavily to s upport bus ines s
  3. 3. Fordney-McCumber Act Raised tariffs to cover the difference between domestic (US A) and foreign production cos ts Meant that American goods Were always cheaper Gave domestic producers a guaranteed market Few foreign goods were imported and bought by consumers
  4. 4. Tax Reductions Federal taxes significantly reduced in 1924,1926 and 1928. In 1920 the highesttaxlevelwas 65% - in 1928 itwas just 25% Over $3.5billion handed out to big business Government still ran ata surplus (income higher than expenditure. ) - $607mn in 1927 Federal tax cuts meantlittle to Dooroeople
  5. 5. Fewer Regulations Federal Trade Commission — the trading standards body was under—funded Sharp business practice like price-fixing was often ignored Offenders rarely prosecuted or fined Child labour continued in S outhern mills Many people Worked 56-hour weeks on as little as 18 cents an hour
  6. 6. Foreign Policies “ Disputes with Mexico over business land solved by diplomacy not war ‘‘ Investmentin japan which was atthe expense of China — helping Japanese occupy Manchuria in 1931
  7. 7. New Business Methods “ Growth ofhuge corporations — mostly manufacturing like Ford, Firestone etc ‘‘ By 1929 the largest 200 corporations owned 20% ofthe nation’s wealth '* Merger followed merger creating huge businesses
  8. 8. How large corporations dominate industry ° Operate a cartelto fix prices — although illegal, government turned a blind eye — petroleum companies controlled the whole process from digging for oil to refining it to selling it in gas stations ’ Create holding companies — where one huge company eg. US Steel obtains a controlling interestin all the other smaller companies to control the market. E . g. S amuel Ins ull — electrical supply empire — controlled 111 companies
  9. 9. Technical Advance 5 Motor vehicle industry — by end of 1920s 23 million cars on the road in USA Huge aspirational desire amongst workers Ford, General Motors , Chrysler — Big Three S timula ted growth in petrol, rubber, plate gla s s , leather production Government invested in road-building — Federal Highway Act 1921 — 10,000 miles a year ofroads being built
  10. 10. Management S cience Blggfil‘ l)llSlI'l€SS : I'l’lOI'€ COHlPl€X management Entrepreneurs like Henry Ford who tried to control allaspects became old-fashioned S pecialis ms developed in production, design, marketing, accounts and finance — all new Growth ofbusiness schools — 89 in 1928 with 67,000 students ManagementScience became respectable for upper middle classes, shedding its clerical image Also more difficult to start one’s own company — trend to ride up the corporate ladder in an established giantinstead
  11. 11. Ta yloris m ‘Time and Motion’ management Dated from late nineteenth century Initiative removed from the workforce People became mere extensions ofthe machine Mos t smaller ma nufa cture rs s till worked in small workshops
  12. 12. Advertising and S alesmanship New mass media — cinema and radio By 1928 — 17,000 cinemas in the USA — offering a cheap escape from the drudge of modern life — huge potential for commercials KDKA in Pittsburgh 1920 first radio station Mass production of radio sets 50 million people listened to the Dempsey- Tunney fight in 1927 Radio stations and production funded by advertising revenues
  13. 13. Need to create a demand “ People needed convincing that they could not do without the latestmodel or design ‘“ Advertising and marketing decided which product would win “%{ve1t1Zst'ng and mass yrocfuction are tlie twin c}[inzfe*rs that Ee e}? the motorofmocfim Business in motion” — ‘J<Zmsas Ciityjiuniaf-‘R9st
  14. 14. Easy Credit By 1929 almost S7billion worth of goods s old on credit 75% ofcars and 50% ofhousehold apphances This led to repayment problems for many Credit issued with few questions asked
  15. 15. Influence in Foreign Economies Raw materials sought in many countries Oil concessions bought in Canada , Venezuela , Iraq, Dutch East Indies (now Indonesia) Firestone developed Liberian rubber industry Guggenheims in S . America for nitrates , copper and lead "" United Fruit Company had a larger budget in Costa Rica than the government there
  16. 16. Foreign Relations US business effectively controlled Canada US businessmen encourage to develop economic ties with the US S R, despite Coolidge refusing to recognise the Communis t government By 1928 25% ofall foreign investmentin US S R was from USA 33% ofall exported Ford tractors went to US S R 85% ofall tractors made in US S R were by l". ..--. J

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