Summary
Summary Economy of America 1917-80
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- PEARSON (PEARSON)
boom, bust and recovery. A complete summary of the economy in America 1917-80. A-level Edexcel history , in search of the American dream
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ECONOMY 1917-41Economy declines Farming
POST-WAR During the war, farmers were given subsidies to produce more, and took out loans for machinery.
DEPRESSION Produced too much after the war and prices fell - increase in bankruptcy.
Industry
1918-1919 There were lots of strikes 1919-1920, failure to get better working conditions and unemployment.
Coal industry was declining
1900 = 90% of energy supplies, 1930 = 60% of energy supplies.
Gov’t = laissez faire and isolationist tariffs = US exports failed and did little to help struggling groups
Economy improves Mass production
BOOM Mass production broke down manufacturing into different steps. Meant products were made easily
and effectively + became cheaper.
1920s 1917 - 4,727,468 passenger cars
1929 - 23,060,421 passenger cars
Ford Model T - Ford introduced the production line, streamlining manufacturing. HOWEVER
DEMONSTRATED THE PROBLEMS OF THE BOOM - ONCE EVERYONE HAD ONE DEMAND
DROPPED.
Cost went down 1914 - $825, 1924 - $260
New management techniques
Attempted to make production line workers as effective. The system worked best when trained
workers stayed at the factory.
Federal policies
Gov’t avoided intervention, kept minimal wartime subsidies and cut taxes to encourage ‘buying
American’
Laissez faire policies meaning that they did not intervene with business
Hire purchase and loans
Paying company for product in fixed payments. Allowed people to buy more consumer goods.
Encouraged a sense of prosperity but increased consumer debt.
1920-1929 consumer debt rose from $3.3bn-$7.6bn
1920 people were borrowing 5% of their income, but by 1929, they were borrowing 10% of their
income.
Economy Improves People bought shares to increase their prosperity for the long term, but as prices increased, people
THE STOCK MARKET bought and sold shares.
People began to borrow money to buy shares = buying on the margin
1929 Bull market - when share prices rise and people expect this to continue.
Bear market - when the price of shares falls and people expect this to continue.
Economy declines Wall street crash - 1929
THE STOCK MARKET Employers cut wages and working hours. The Republican government = laissez faire and so did
nothing.
1929 People, businesses and banks were in debt. Prices kept falling until investors had lost everything.
⅓ of all banks were disrupted by 1933
Economy declines Unemployment was at 24.9% in 1933
THE GREAT Homeless and poverty increased and at first the gov’t did nothing.
DEPRESSION Roosevelt had to close all banks.
Economy improves
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