Cambridge IGCSE History 0470 syllabus for 2020, 2021 and 2022.
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Summary Cambridge IGCSE Modern World History "The Boom-USA 1920s"
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History- Dept study D - The USA 1919-41 (0470)
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Depth study D: The USA 1919-41
HOW FAR DID THE US ECONOMY BOOM IN THE 1920S?
THE ECONOMIC BOOM:
- Referred to as the dynamic growth of the american economy during the decade after
the first world war
- In 1926, American living standards were higher than ever before
- American businesses were growing faster than ever before because of the new
production methods. These goods became more accessible to everyone
- Companies profits were rising and confidence was rising
- Banks lent money to Americans and invested it in the stock exchange
- More homes were supplied with electricity and skyscrapers were built higher than
before as a symbol of wealth
FACTORS OF THE BOOM:
iNDUSTRIAL - Rich in resources
STRENGTH - Growing population ( 123 million by 1923) and most lived in towns and cities. They were working in
industry and commerce, usually earning higher wages than farming. These people became an
important market for the USA’s new industries
- Most companies had no need to export outside the USA and they had all the resources they
needed in the US itself
- Ever since the 1860s and the 1870s, American Industries have been growing vigorously. By the
time of the First world war, the USA led the world in most areas of industry ( it had a massive steel,
coal and textile industry and it was the leading oil producers)
- It was also developing new technology such as motorcars, telephones and electrical lighting (
electricity key to the BOOM! )
- American agriculture became the most efficient and produced in the world
WW1 - Americans had tried to stay out of war ( isolationism and Monroe doctrine )
- Lent money to the Allies, sold arms and munitions to Britain and France
- Sold food, clothes and many more to europe
- One way trade boosted the American Industry; America took over Europe’s trade around the world
- American exports to the areas controlled by the European colonial powers increased during war
- Manufactured explosives during the war, stimulating the range of products which became
American industries
- Aircraft technology was also improved during the war ( 1918 there were no civilian airlines but by
1930 new aircraft companies flew 1620000 flights a year )
- When America emerged
PRIOR TO THE WAR:
- Germany had one of the most successful chemical industries but during the war, they were
replaced by Americans
- When America entered the war, it’s resources were drying up and there was a short depression but
by 1922 the American economy was growing again
,Republican LAISSEZ FAIRE:
policies - Believed that the government should not interfere with the everyday lives of the American people
- Believed that the government should leave the businessmen alone and this was how prosperity
came about; Hoover’s ‘rugged individualism’
- They admired strong americans and their ability to solve their own problems
PROTECTIVE TARIFFS:
- Made imports more expensive to buy foreign goods
- In 1922, Harding introduced the FORDNEY MCCUMBER TARIFFS ( made imports much more
expensive in the USA )
- Tariffs helped to protect businesses against foreign firms, helping American firms to grow faster
LOW TAXATIONS:
- Republican kept taxation as low as possible
- Increased disposable income to spend
- Wealthy people would reinvest their money industries
POWERFUL TRUST:
- Trust were huge super-corporation that dominated the industry- democrats thought against them
as they believed that it was unhealthy for monopoly power.
- The republicans allowed trusts to do whatever they wanted as they believed the ‘captains of
industry’ knew what was good for the USA
New - Throughout the 1920s, new industries and new methods were developed in the USA, allowing the
industries, country to exploit it’s vast resources of raw materials to produce steel, chemicals and glass and
new methods machinery
- Mass produced cars were so chap that most Americans were able to afford them. The enormous
increase in cars produced, increased the demand for steel glass and rubber, sothese industries
boomed
- By the 1920s, mots homes had electricity and nearly 70% of all Americans had electric lights
- Factories were increasingly run by electricity, the amount of electricity consumed in the 1920s
doubled. This led to a boom in many consumer goods such as, fridges, vacuum cleaners, washing
machines and radios
- the se new methods meant that huge amount of goods could be produced cheaply so more people
could afford them
- The things that used to be luxuries were not made cheaper by new inventions and mass
production. Silk stockings that had only been a luxury for the rich were affordable for everyone// in
1900 only 1200 pairs were sold but in 1930, 300 million pairs were sold.
- Scientific progress also transformed the economy. The USA’s chemical industry led the world in
providing fertilisers and dyes, as well as introducing new materials like Bakelite and rayon. that had
a wide range of uses, and led to cheaper products
The car - The most important of the booming industries was the automobile industry
- The motor car had only been developed in the 1890s but they were now extremely expensive as
they took a long time to build ( 1900, only 4000 ars were produced )
- The car production was revolutionised by HENRY FORD and in 1913 he set up the first moving
production line ( specialisation ) - assembly line
- By the end of the 1920s, the motor industry was the largest industry in the USA, employing
thousands of workers directly but also affected other industry such as glass, leather, steel and
rubber.
Automobiles used up to 75% of the glass produced
- Petrols and roads were also needed for them and road construction was the biggest single
employer in the 1920s
- the price of cars dropped from $940 in 1920 to $290 in 1929.
MODEL T CARS:
- More than 15million were produced between 1908 and 1925
- In 1927, they came off as the production line every 10 second
- In 1929, 4.8million cars were made
- In 1925, they cost $290 ( 3 times the monthly wage of a factory worker)
AT THE END OF THE 1920S:
, - 1 car for every 5 people
- 1 car to 113 people in Britain
- 1 car to 7000 people in Russia
Mass - Mass production requires mass consumption
consumption - Mass nationwide advertising had been used for the first time in the US to get people to support the
war effort. Many of these advertisers to set up agencies to sell cars, cigarettes, clothings and other
consumer goods
- Poster advertisement
- Radio advertisement
- Travelling salesmen
- Huge number of mail ordering companies which people across America, especially in the remote
areas, could buy goods from catalogues
- In 1928, ⅓ of Americans had bought goods from Sears, Roebuck and Company catalogue
- Expanded the market for products
- Even if they did not have money, people could borrow easily or they cold take advantage of the
‘buy now, pay later schemes
- 8/10 radios were bought on credit
- The chain stores now emerged so how Americans could buy the same products
State of mind - In the 1920s, people believed they had the right to prosper
- Many aimed to have a nice house, a good job, plenty to eat and a house full of consumer goods
- Consuming more was seen as apart of being Americans
- In the earlier decades being ‘thrifty’ was seen as a good quality but now was replaced by spending
was seen as a good quality
THERE WAS CONFIDENCE IN THE ECONOMY:
- Business people had the confidence to invest in new industries, experiment with new ideas and set
up business and employ people
- Ordinary Americans had the confidence to buy goods, some on credit, because they were sure that
they would be able to pay back.
- Confidence was vital to the economy
AVAILABILITY - In the 1920s, many companies needed additional money to extend their businesses.
OF CREDIT - One of the biggest investment banks they used was led by J P Morgan Jr.
- However, businesses often preferred to raise finance by selling shares on the stock market.
- By the mid-1920s, people frequently bought the shares “on the margin”, by paying about 10 per
cent of their value directly from their savings and borrowing the rest from one of the thousands of
small, unregulated banks which existed.
- Credit firms emerged.
- They arranged for consumers to pay for goods in instalments at low interest rates (i.e. hire
purchase).
- This led to an increased demand for goods because the majority of Americans could now buy
expensive items they previously could not afford. New gadgets for the home were particularly
popular, such as vacuum cleaners and waffle irons.
- The demand for extra goods, in turn, led to more jobs and more consumers.
HENRY FORD:
- More famous than the president as he drastically changed the US society
MASS PRODUCTION:
- Ford pioneered in the production line
- The most difficult work was done by machines ( saving cost of labour)
- The Ford Factory was in detriot, michigan
- These mass production techniques were taken up by other US industries, which led
to the production of masses of cheap goods which could be affordable by many
ordinary Americans
, BUSINESS IDEAS:
- Many people tired to copy the idea of the assembly line
- Ford autobiography was the best seller in 12 languages
- Ford believed in hard work for himself and his workers
- Everyday he would walk around the factory to ensure everyone was doing their part
- He was constantly looking for ways to improve and speed up the production process
- One problem was that Fords worker kept leaving because the work was too
monotonous and exhausting
- So in 1914, ford announced he was going to increase daily wages to $5 which was
double of what it had been
- Despite doubling his wage bill, he still managed to increase his profits
IMPACT OF MODEL T :
- Started the enornous growth of car ownerships, he wanted ordinary Americans to
have their own car
- When the Model T came out, it was priced at $1200. By 1928, it was $295
- The Model T brought freedom to rural Americans
- Encouraged the building of roads and the development of suburbs
- The car contributed to the economic boom by stimulating other industries ( 905 of
petrol w, 80% of rubber, 75% of glass were consumed by cars in the 1920s)
- ½ of the cars were Model T
- 15 million were built by 1928, when production ended
PROBLEMS IN THE FARMING INDUSTRY
- In 1929, 42% of the American population lived below the poverty line
- The total US farming income fell from $22 billion in 1919 to $13 billion in 1928
- Around 30 million people earned a living through farming and half of Americans lived
in rural area
- Around 60 millions Americans were farmers living in rural area
- 6 million rural americans mainly farm labourers were forced off their land in the 1920s
- Between 1920-30 the number of farms declined for the first time in American History
- Many of the farmers who were forced off their land were unskilled workers who
migrated to the cities, were there was little demand for their labour
- African Americans were particularly badly hit. They had always done the least skilled
job in the rural areas - ¾ of a million of African Americans were unemployed
DECLINING EXPORTS:
- After the WW1, Europe imported far less food from the USA. This was partly because
Europe was poor and they could now produce their own food but, it was also
because of the US tariffs, which stopped Europe from exporting to US
NEW COMPETITION:
- Farmers were also struggling against competition from highly efficient Canadian
wheat producers. All of this came at the same time when the population of the US
was falling and there were fewer people to feed
OVERPRODUCTION :
- Underlying all these problems was overproduction, From 1900 to 1920, while farming
was doing well, more and more land was being farmed. Improved machinery,
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