Essay
What is the most important factor leading to Lloyd George and the Liberal’s downfall?
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- PEARSON (PEARSON)
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Why did America go through an economic boom?Reason Explanaton
- Andrew Mellon controlled the economy throughout the 1920s. He believed
in laissez faire and wanted to give big businesses just what they wanted.
- Taxes on the rich were reduced from 50% in 1921 to 20% in 1926. This
encouraged the rich to invest in new and developing industries.
- Tax advantages for large corporatons encouraged the growth of industry,
Government Policies so that the US Treasury actually received more in tax due to increased
profits.
- The Government introduced tarifs on foreign goods coming into America.
The ‘Fordney-McCumber Tarif Act’ of 1922 raised tarifs to protect industry.
They felt that if foreign goods were very expensive, then people would prefer
to buy cheaper, American goods, thus protectng their own industry.
- America became the world’s largest industrial power by 1918, due to the
demand for supplies and arms during the war.
- While the European countries were busy fightng, the USA took over many
of their colonial markets.
Impact of WW1 - Many of America’s industrial rivals had become bankrupt as a result of the
war, which benefiied America and made it able to develop its economy
more efectvely.
- According to the First World War Foreign Debts Commission, Britain, France
and Italy owed America $22 billion plus interest.
- The trade unions became weaker. No strike agreements, called ‘Yellow Dog
Contracts’ were upheld by the courts so employers had greater control over
their workforces.
Weak Trade Unions
- Unions were excluded altogether from the car industry.
- Employers were able to keep wages low and working hours long, at a tme
when profits were increasing rapidly.
- The total producton of American industry increased by 50% during the
1920s. This boom was fuelled by a demand for ‘new’ consumer goods, such
as radios and washing machines.
Inventons & - The largest growth could be seen in the motor industry. Car ownership
Consumer Goods increased from 9 million to 26 million between 1919 and 1929, which is an
increase of 289%. This period was called the ‘Second Industrial Revoluton.’
- Mail-order companies meant people in the countryside had access to the
wide range of goods on ofer.
- In order to increase demand for goods, hire purchase was introduced. This
allowed consumers to buy goods for a small deposit and then pay of the rest
of the price in a series of small instalments for a small rate of interest.
Credit - By 1929, 75% of cars and 50% of major household appliances were bought
on credit.
- Between 1919 and 1929 the amount of consumer credit, excluding
agriculture, grew from $32 billion to $60 billion.
Corporatons & Big - Big businesses really benefiied from Republican policies, enabling them to
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